SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report: October 30, 1997
ESSEX CORPORATION
(Exact name of Registrant as specified in its charter)
Virginia Commission File No. 0-10772 54-0846569
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
9150 Guilford Road
Columbia, Maryland 21046-1891
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (301) 939-7000
<PAGE>
ESSEX CORPORATION
Item 2. Acquisition or Disposition of Assets -
On October 16, 1997, Essex Corporation (the "Company") sold certain
of the assets of its Systems Effectiveness Division ("SED") to Star
Mountain, Inc., a privately-held corporation. The price was
$1,475,000, subject to adjustment as described below. The Company
sold the accounts receivable, contracts, fixed assets and certain
other assets. The acquiring company assumed certain liabilities, such
as accounts payable, accrued vacation and certain operating and
capital lease obligations. The effective date of the transaction was
October 1, 1997.
The Company received $525,000 in cash at closing and took a
promissory for $325,000 payable in equal monthly installments over 15
months ending January 1999. The balance of $625,000 is held in escrow
and is expected to be paid through January 1998 as the respective
contracts of SED are novated to the acquiror. Each contract novation
requires the approval of the other party in the contract, principally
agencies of the U.S. Government. The sale price is subject to
adjustment for any change in the net assets and to certain
indemnifications and warranties by the Company which could effect the
ultimate amount of proceeds received.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The financial information required for this item could not
be prepared by the date that this report is being filed.
The required information should be filed as an amendment to
this Form 8-K, as soon as practicable.
(c) Exhibits
2.2 Asset Purchase Agreement dated October 16, 1997 between
Essex Corporation and Star Mountain, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ESSEX CORPORATION
(Registrant)
\Joseph R. Kurry, Jr.\
DATE: October 30, 1997 Joseph R. Kurry, Jr.
Vice President, Treasurer and
Chief Financial Officer
2
<PAGE>
ASSET PURCHASE AGREEMENT
BETWEEN
STAR MOUNTAIN, INC.
AND
ESSEX CORPORATION
FOR THE PURCHASE OF THE
SYSTEMS EFFECTIVENESS DIVISION
dated 16 October, 1997
and effective as of 12:01 a.m., 1 October, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF ASSETS.............................................1
1.1 Transfer of Assets.............................................1
1.2 Consideration for the Transferred Assets.......................4
1.3 Assumption of Liabilities......................................5
1.4 Allocation of Purchase Price...................................6
1.5 Security Agreement.............................................6
1.6 Subordination to all Senior Financing..........................6
2. REPRESENTATIONS AND WARRANTIES OF SELLER................................7
2.1 Organization and Qualification ................................7
2.2 Corporate Power and Authority..................................7
2.3 Validity, Etc..................................................8
2.4 Books and Records..............................................8
2.5 Financial Statements...........................................9
2.6 Absence of Undisclosed Liabilities.............................9
2.7 Labor and Employee Relations...................................9
2.8 Powers of Attorney; Absence of Limitations on Competition;
Guarantees....................................................10
2.9 Significant Customers.........................................10
2.10 Governmental Approvals/Filings................................11
2.11 Absence of Adverse Change; Conduct of Business................11
2.12 Certain Practices.............................................11
2.13 Compliance with Law; Licenses and Permits.....................12
2.14 Employee Benefits.............................................12
2.15 Fixed Assets..................................................13
2.16 Insurance.....................................................14
2.17 Outstanding Contracts.........................................14
2.18 Outstanding Leases............................................14
2.19 Intellectual Properties.......................................15
2.20 Proprietary Information of Third Parties......................16
2.21 Transactions with Affiliates..................................16
2.22 Taxes.........................................................16
2.23 Litigation....................................................17
2.24 Environmental Matters.........................................18
2.25 Broker's or Finder's Fees.....................................20
2.26 Disclosure....................................................20
- i -
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF BUYER................................20
3.1 Organization..................................................20
3.2 Corporate Power and Authority.................................21
3.3 Validity, Etc.................................................21
3.4 Broker's or Finder's Fees.....................................21
3.5 Disclosure....................................................21
4. COVENANTS AND AGREEMENTS...............................................22
4.1 Cooperation...................................................22
4.2 Best Efforts..................................................22
4.3 Tax Returns...................................................22
4.4 Investigations................................................23
4.5 Conduct of Business in the Ordinary Course....................23
4.6 Preservation of Business......................................24
4.7 Notification of Material Changes and Litigation...............24
4.8 Payment of Liabilities........................................25
4.9 Employees and Consultants.....................................25
4.10 Billed Accounts Receivable....................................25
5. CONDITIONS TO THE BUYER'S OBLIGATIONS..................................26
5.1 Consents......................................................26
5.2 [Reserved]....................................................26
5.3 Novation of Contracts.........................................26
5.4 Representations and Warranties................................26
5.5 [reserved]....................................................26
5.6 Opinion of Counsel to the Seller..............................26
5.7 Closing Documents.............................................28
5.8 Approval of the Buyer and Its Counsel.........................29
6. CONDITIONS TO THE SELLER'S OBLIGATIONS.................................29
6.1 Opinion of Counsel to the Buyer...............................29
6.2 Closing Documents.............................................29
6.3 Approval of the Seller and Its Counsel........................29
7. THE CLOSING AND CERTAIN CLOSING DELIVERIES.............................29
7.1 Time and Place of Closing.....................................29
7.2 Deliveries by the Seller......................................30
7.3 Deliveries by the Buyer.......................................31
- ii -
<PAGE>
8. INDEMNIFICATION.........................................................32
8.1 Survival.......................................................32
8.2 Indemnification by Seller......................................32
8.3 Notice to Seller...............................................33
8.4 Indemnification by Buyer.......................................33
8.5 Notice to the Buyer............................................34
8.6 Survival of Indemnification....................................34
8.7 Offset.........................................................35
9. MISCELLANEOUS...........................................................35
9.1 Knowledge of Seller............................................35
9.2 "Person" Defined...............................................35
9.3 Notices........................................................35
9.4 Entire Agreement...............................................37
9.5 Modifications and Amendments...................................37
9.6 Assignment/Binding Effect......................................37
9.7 Parties in Interest............................................37
9.8 Governing Law..................................................37
9.9 Arbitration....................................................38
9.10 Severability...................................................38
9.11 Interpretation.................................................38
9.12 Headings and Captions..........................................39
9.13 Reliance.......................................................39
9.14 Expenses.......................................................39
9.15 Gender.........................................................39
9.16 Publicity......................................................39
9.17 Counterparts...................................................39
- iii -
<PAGE>
INDEX TO EXHIBITS
EXHIBIT A -- Form of Bill of Sale
EXHIBIT B -- Form of Assignment and Assumption Agreement
EXHIBIT C -- Forms of Lease Assignment and Assumption Agreement
EXHIBIT D -- Form of Subordinated Non-Negotiable Promissory Note
EXHIBIT E -- Form of Escrow Agreement
EXHIBIT F -- Form of Security Agreement
EXHIBIT G -- Form of Subordination Agreement
EXHIBIT H -- Form of Certification of Non-Foreign Status
INDEX TO SCHEDULES
Schedule 1.1.2 -- Excluded Assets
Schedule 1.2 -- Escrow Drawdown Schedule
Schedule 1.3 -- Assumed Liabilities
Schedule 1.4 -- Allocation of Purchase Price
Schedule 2.3 -- Exceptions to Validity
Schedule 2.5 -- Financial Reports
Schedule 2.8 -- Powers of Attorney; Limitations on
Competition; Guarantees
Schedule 2.9 -- Significant Customers
Schedule 2.10 -- Governmental Approvals
Schedule 2.11 -- Adverse Changes
Schedule 2.13 -- Non-Compliance with Laws
Schedule 2.14 -- Employee Benefits
Schedule 2.16 -- Insurance
Schedule 2.17 -- Contracts
Schedule 2.18 -- Leases
Schedule 2.19 -- Intellectual Properties
Schedule 2.20 -- Proprietary Information of Third Parties
Schedule 2.22 -- Taxes
Schedule 2.23 -- Litigation
Schedule 2.24 -- Environmental Permits
Schedule 5.1 -- Consents
Schedule 5.3 -- Novated Contracts
- iv -
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into this
16th day of October, 1997 and effective as the 1st day of October, 1997, by and
between STAR MOUNTAIN, INC. (the "Buyer"), a Virginia corporation, and ESSEX
CORPORATION (the "Seller"), a Virginia corporation.
PRELIMINARY STATEMENTS:
The Seller, through its Systems Effectiveness Division, is engaged in
the business of demining training and training systems, human factors
engineering, and nuclear courier transportation safeguards training; and
The Seller desires to sell or otherwise transfer to the Buyer certain
of its assets and the aforementioned business conducted by it (the "Business").
NOW THEREFORE, in consideration of these preliminary statements and
the mutual covenants, representations, warranties, and agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. PURCHASE AND SALE OF ASSETS
1.1 TRANSFER OF ASSETS
1.1.1 Upon the terms and subject to the conditions set forth
in this Agreement, as of the Effective Time (as
hereinafter defined), or with respect to the Escrowed
Contracts (as hereinafter defined) upon the novation or
deemed novation of same in accordance with this
Agreement, including Sections 1.1.3 and 1.1.4, the
Seller shall transfer to the Buyer, free and clear of
all claims, charges, liens, contracts, rights, options,
security interests, mortgages, encumbrances, and
restrictions whatsoever (individually a "Claim" and
collectively, "Claims"), all of the assets, properties
and rights owned by the Seller or in which the Seller
has any right or interest of every type and
description, real, personal and mixed, tangible and
intangible, confirmed or contingent relating to the
Business (other than the Excluded Assets, as
hereinafter defined), including, without limitation,
business agreements, property, inventory, goodwill,
supplier lists, customer lists, prepaid insurance,
licenses and permits, processes, service marks,
know-how, show-how, trade secrets, licenses to software
(including, without limitation, documentation),
computers and computer equipment, files and other
records, systems and processes, security deposits,
contracts, arrangements and
- 1 -
<PAGE>
understandings, oral and written, formal and informal,
for work to be performed and/or services to be
provided, interests in real estate, leasehold and other
improvements, machines, machinery, equipment,
furniture, fixtures, supplies, all rights and claims
under insurance policies and other contracts of
whatever nature, all causes of action, claims and
demands of every nature relating to the Assumed
Liabilities and Contracts (as hereinafter defined), the
right to use the name "Systems Effectiveness Division"
or any derivative thereof, and all other assets,
properties, and rights of every kind and nature owned
by the Seller, whether or not specifically referred to
in this Agreement (collectively, the "Transferred
Assets"), all with the intention that the Business
shall be transferred to the Buyer as a going concern.
Notwithstanding any provision of this Agreement to the
contrary, the Buyer acknowledges that on the Closing
Date, a Lease Assignment and Assumption Agreement in
the form of EXHIBIT C(2) with respect to the premises
located at 1430 Springhill Rd., McLean, Virginia, will
not have been obtained. The Seller agrees to use its
best efforts to secure from TDP Corporation and deliver
to the Buyer such Lease Assignment and Assumption
Agreement, executed by TDP Corporation and the Seller,
and until such time, to take all such measures as are
necessary to mitigate the impact of the Seller's not
having obtained such Lease Assignment and Assumption
Agreement prior to Closing (including but not limited
to allowing the Buyer to use the subject premises).
1.1.2 Notwithstanding any provision of this Agreement to the
contrary, there shall be excluded from the Transferred
Assets and retained by the Seller the assets listed in
SCHEDULE 1.1.2 attached hereto and incorporated herein
by reference (collectively, the "Excluded Assets").
1.1.3 Notwithstanding any provision of this Agreement to the
contrary, there shall be excluded from the Transferred
Assets and retained by the Seller all assets,
contracts, arrangements, and understandings which are
not capable of being transferred or assigned without
the approval or consent of any party thereto other than
the Seller or the approval of a creditor of the Seller
if such approval or consent has not been obtained
(collectively, the "Contingent Assets"); PROVIDED,
however, that the Seller and the Buyer agree that, upon
satisfaction of the conditions set forth in Section
1.1.4 hereof, the Contingent Assets shall be
transferred to the Buyer in accordance with the
provisions of Section 1.1.5 of this Agreement and the
Contingent Assets shall be deemed Transferred Assets
for all purposes under this Agreement; notwithstanding
the foregoing, the Buyer acknowledges that the Lease
Assignment and Assumption Agreement from TDP
Corporation in the form of Exhibit C shall
- 2 -
<PAGE>
be delivered to the Buyer in accordance with the second
paragraph of Section 1.1.1.
1.1.4 The Seller shall, at its own cost, cause all contracts
listed on SCHEDULE 5.3 to be novated in the name of
Buyer as soon as possible after the Closing Date, but
in no event later than ninety (90) days following the
Closing Date; PROVIDED that Buyer shall reasonably
cooperate with Seller and provide such information
regarding the Buyer as Seller shall reasonably request
in order to novate such contracts, including but not
limited to submission to an audit conducted by the
Defense Contract Audit Agency. Additionally, if the
Federal government or prime contractor (in the event
the contract to be novated in the name of the Buyer is
a subcontract) should terminate for convenience such
contract with the Seller and thereafter contract with
the Buyer for substantially the same project, then, in
that event, such contract shall be deemed to have been
novated to the Buyer, notwithstanding any provision
herein to the contrary, and the Seller shall be
entitled to payment for such contract in accordance
with the amount set forth on SCHEDULE 1.2. Each
contract listed on SCHEDULE 5.3 (other than Contract
No. NAS9-97022, Grant No. 1 R43 AG14316-01 and Grant
No. AA11608-1) shall, until such time as it has been
novated as aforesaid, be fully subcontracted to the
Buyer at provisional rates except for direct and
indirect costs (to the extent provided in the following
sentence) properly incurred by the Seller prior to
Closing (each such subcontract to be effective as of
the Effective Date). Notwithstanding anything in this
Agreement to the contrary, the Seller agrees not to
claim any indirect costs with respect to any of the
contracts listed in SCHEDULE 5.3 in excess of
provisional contract costs and then, only when and to
the extent funds to cover such costs are available
after payment of all amounts due the Buyer with respect
to the subject contract (any of the foregoing claims
for such costs by the Seller to be subordinate in all
respects to the claims of the Buyer).
1.1.5 The Seller shall transfer the Transferred Assets to
the Buyer at Closing pursuant to a Bill of Sale in
substantially the form of EXHIBIT A, an Assignment and
Assumption Agreement in substantially the form of
EXHIBIT B, Lease Assignment and Assumption Agreement in
substantially the forms of EXHIBIT C(1), C(2) AND C(3),
and such other documents and instruments as are
necessary to give effect to the transfer, conveyance,
and assignment of the Transferred Assets as the Buyer
or its counsel may reasonably request.
1.1.6 At any time and from time to time after the Closing
Date, at the request of the Buyer and without further
consideration, the Seller shall execute and deliver
such other instruments of sale, transfer, conveyance,
assignment, and confirmation as may be reasonably
requested in order to more effectively
- 3 -
<PAGE>
transfer, convey, and assign to the Buyer and to
confirm the Buyer's title to the Transferred Assets.
1.2 CONSIDERATION FOR THE TRANSFERRED ASSETS
The total consideration for the Transferred Assets and the
Business to be paid to the Seller shall be equal to the sum of
$1,475,000 (the "Estimated Purchase Price"), subject to
adjustment as follows:
1.2.1 The Estimated Purchase Price shall be increased or
decreased, dollar for dollar, by the amount by which
the net worth of the Transferred Assets at the
Effective Date is greater or less than, respectively,
the sum of $522,381 which number represents the net
worth as of August 31, 1997.
1.2.2 [reserved]
The Estimated Purchase Price shall be payable as follows:
1.2.3 The deposit in the amount of two hundred thousand
dollars ($200,000) delivered to Seller on July 14, 1997
shall be deemed paid to the Seller.
1.2.4 [reserved]
1.2.5 Payments by wire transfer at Closing for and on behalf
of the Seller to Signet Bank/Virginia in the amount of
two hundred sixty four thousand Dollars ($264,000) and
F&M Bank in the amount of $61,000, all in accordance
with wiring instructions provided and certified by the
Seller at Closing.
1.2.6 The principal amount of $325,000 plus interest,
payable in fifteen (15) equal monthly payments of
principal and interest in the amount of twenty two
thousand nine hundred eighty nine Dollars ($22,989),
represented by a secured, subordinated, non-negotiable
promissory note payable to the Seller plus interest at
nine percent (9%) per annum (the "Promissory Note"),
the form of which is attached hereto as EXHIBIT D. The
payments under the Promissory Note shall be secured as
provided in the Security Agreement and subordinated in
accordance with Section 1.6.
1.2.7 An amount equal to six hundred twenty five thousand
Dollars ($625,000) shall be deposited by the Buyer into
an escrow account on the Closing Date (the "Escrowed
Funds") to be retained, paid to the Seller, returned to
the Buyer or otherwise held in accordance with that
certain Escrow Agreement in the form of EXHIBIT E
hereto, to be executed and delivered by the Buyer and
the Seller at Closing.
- 4 -
<PAGE>
Within twenty (20) days following the Closing Date, the
Seller and the Buyer shall jointly determine the
adjustment to the Purchase Price, if any, pursuant to
Section 1.2.1. If the Purchase Price is greater than
the Estimated Purchase Price, then the Buyer shall pay
to the Seller by certified check the difference between
the Purchase Price and the Estimated Purchase Price
within five (5) business days following determination
of the Purchase Price. If the Estimated Purchase Price
is greater than the Purchase Price, then the Seller
shall pay to the Buyer by certified check the
difference between the Purchase Price and the Estimated
Purchase Price within five (5) days following
determination of the Purchase Price; PROVIDED that, at
the Buyer's option, such amount may be deducted from
the Escrowed Funds.
1.3 ASSUMPTION OF LIABILITIES
1.3.1 The only obligations and liabilities to be assumed by
the Buyer in connection with its acquisition of the
Transferred Assets (the "Assumed Liabilities") are the
obligations and liabilities specifically listed on
SCHEDULE 1.3 and obligations and liabilities arising
after the Effective Time, including obligations under
executory contracts listed on SCHEDULE 1.3 arising
after the Effective Time (provided such contracts are
not in default and are assigned in writing by the
Seller with the written consent of the other party or
parties thereto, if necessary, and are delivered to the
Buyer on or prior to the Effective Time).
1.3.2 The Buyer shall assume the Assumed Liabilities
pursuant to the Assignment and Assumption Agreement
substantially in the form of EXHIBIT B and the Lease
Assignment and Assumption Agreement substantially in
the form of EXHIBIT C. The Seller shall remain liable
for the payment of all other liabilities and
obligations of the Seller which accrue prior or
subsequent to the Effective Time. Except for the
Assumed Liabilities in the amount and to the extent
provided in this Section 1.3 (if such amount or extent
is stated therein), the Buyer shall not assume or be
responsible for any other liabilities or obligations
which relate in any manner to the operation of the
Business prior to the Effective Time, and the Seller
shall indemnify, defend, and hold the Buyer harmless
from all of such obligations and liabilities as set
forth in Section 8.2 below. Operating expenses,
including without limitation rent payable under real
estate and equipment leases, staff commissions, unpaid
vacation and holiday pay, and rebates to customers for
which bills are received or payment became due after
the Effective Time with respect to periods both prior
to and after the Effective Date will be allocated to
each of the Seller and the Buyer on a pro-rata basis
according to the ratio of pre- Effective Time days to
post-Effective Time days; promptly upon receipt of
- 5 -
<PAGE>
notice from one party of amounts so allocated to the
other, the party to whom notice was directed shall
remit full payment therefor to the other party.
1.4 ALLOCATION OF PURCHASE PRICE
The considerations paid and the liabilities assumed by the Buyer
pursuant to Sections 1.2 and 1.3 above shall be allocated among the
Transferred Assets purchased hereunder as set forth on SCHEDULE 1.4
attached hereto, the amounts set forth thereon to be modified in
amounts mutually agreeable to the Buyer and the Seller to take into
account any adjustments to the Estimated Purchase Price made pursuant
to this Agreement. The Seller and the Buyer each hereby covenant and
agree that neither of them will take a position on any income tax
return, before any governmental agency, or in any judicial proceeding
that is in any way inconsistent with the allocation set forth on
SCHEDULE 1.4. Each party shall duly and timely file Form 8594 with its
appropriate tax returns.
1.5 SECURITY AGREEMENT
The obligation of the Buyer to make payment due under Section 1.2.6
shall be secured pursuant to the terms of a Security Agreement in the
form of EXHIBIT F hereto, to be executed by the Buyer and the Seller
at Closing.
1.6 SUBORDINATION TO ALL SENIOR FINANCING
All payments under the Note and the Security Agreement, and the
security provided to the Seller pursuant to this Agreement and the
Security Agreement shall be subordinate in all respects to all Senior
Financing. For purposes of this Agreement, "Senior Financing" shall
mean (i) all financing of any nature (excluding operating and capital
leases and purchase money security interest financing) obtained by the
Buyer, the aggregate outstanding principal of which does not exceed
the sum of four million five hundred thousand Dollars ($4,500,000),
(ii) all operating and capital leases, (iii) all other extensions of
credit which are secured by a purchase money security interest, (iv)
all financing secured or to be secured by the shares of any entity
which was or is acquired by the Buyer, in which entity the Buyer holds
or will hold a controlling interest, (v) up to $200,000 in any types
of encumbrances of the Buyer's assets other than those described in
(i) through (iv) which are in existence as of the Effective Date, and
(vi) all circumstances giving rise to any liens or encumbrances on the
Buyer's assets of any nature which are contested by the Buyer in good
faith. The Seller agrees to execute and deliver to the Buyer at
Closing a Subordination Agreement in the form of EXHIBIT G. The Seller
further agrees upon the request of the Buyer to execute and deliver
all such additional agreements and documents as may be reasonably
required by any third party now or hereafter providing Senior
- 6 -
<PAGE>
Financing to evidence the aforementioned subordination of payment and
security interest.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller represents
and warrants to the Buyer, as of the Effective Date, as of the date
hereof and as of the Closing Date, as follows:
2.1 ORGANIZATION AND QUALIFICATION
The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia. The
Seller is qualified to do business in the Commonwealth of Virginia,
the State of Florida, the State of New Mexico, and the State of
Alabama. The nature of the Business or the Transferred Assets does not
require the Seller to be licensed or qualified in any jurisdiction in
which the failure to so qualify would have a material adverse effect
on the Business or the Transferred Assets. The Seller has made
available to the Buyer complete and correct copies of the Articles of
Incorporation and By-laws of the Seller as currently in effect.
2.2 CORPORATE POWER AND AUTHORITY
The Seller has the corporate power and authority to own and hold its
properties and to carry on its business as now conducted, including,
to the best of the Seller's knowledge and belief, the right to use the
name "Systems Effectiveness Division." The Seller:
2.2.1 has the corporate power and authority to execute,
deliver, and perform this Agreement (including the
Exhibits and the Schedules hereto) and the other
documents and instruments contemplated hereby
(collectively, this Agreement, the Exhibits and
Schedules hereto, and the other documents and
instruments contemplated hereby, including but not
limited to the Non- negotiable Promissory Note, the
Assignment and Assumption Agreement, the Lease
Assignment and Assumption Agreement, and the Bill of
Sale shall constitute the "Documents")and to consummate
the transactions contemplated hereby and thereby;
2.2.2 has taken all necessary corporate and shareholder
action to authorize and approve the execution,
delivery, and performance of this Agreement and the
other Documents and the consummation of the
transactions contemplated hereby and thereby; and
- 7 -
<PAGE>
2.2.3 has duly and validly executed and delivered this
Agreement and the other Documents and this Agreement
and the other Documents constitute valid and binding
obligations of the Seller, enforceable against the
Seller in accordance with their terms.
2.3 VALIDITY, ETC.
Except as set forth on SCHEDULE 2.3, neither the execution and
delivery of this Agreement or the other Documents, the consummation of
the transactions contemplated hereby or thereby, nor the performance
of this Agreement or the other Documents by the Seller will:
2.3.1 violate, conflict with or result in any breach of any
trust agreement, articles of incorporation, bylaw,
judgment, decree, order, statute, or regulation
applicable to the Seller;
2.3.2 violate, conflict with or result in a breach, default,
or termination or give rise to any right of
termination, cancellation, or acceleration of the
maturity of any payment date of any of the obligations
of the Seller or increase or otherwise affect the
obligations of the Seller under any law, rule,
regulation, or any judgment, decree, order,
governmental permit, license, or order or any of the
terms, conditions, or provisions of any mortgage,
indenture, note, license, agreement, or other
instrument or obligation related to the Seller or to
the Seller's ability to consummate the transactions
contemplated hereby or thereby, except for such
defaults (or rights of termination, cancellation, or
acceleration) as to which requisite waivers or consents
have been or as of the Closing Date will be obtained in
writing and provided to the Buyer;
2.3.3 violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to the Seller; or
2.3.4 result in the creation of any Claim upon the
Transferred Assets.
2.4 BOOKS AND RECORDS
The minute books of the Seller, the relevant portions of which have
been or will be made available to the Buyer and its representatives,
contain materially accurate records of all meetings of and corporate
actions or written consents by the shareholders and Board of Directors
of the Seller relating to the Business or the Transferred Assets set
forth in such minute books during the period of January 1, 1993
through the date of this Agreement.
- 8 -
<PAGE>
2.5 FINANCIAL STATEMENTS
The Seller has previously furnished to the Buyer, and attached hereto
as SCHEDULE 2.5 are the Seller's SEC Form 10-KSB Annual Report
Quarterly Filings dated December 29, 1996, and quarterly reports filed
for SEC Form 10-QSB's for the period ended March 30, 1997 and June 29,
1997, on file with the United States Securities and Exchange
Commission, and the unaudited balance sheet of the Seller's Systems
Effectiveness Division (the "Balance Sheet") as of August 31, 1997
(the "Balance Sheet Date"). All such financial reports (the "Financial
Reports") have been prepared in good faith in accordance with the
books and records of the Seller, and accurately and fairly present the
financial position and results of operations of the Seller as of their
respective dates and for their respective periods. Such statements
were not necessarily prepared in accordance with generally accepted
accounting principles. Such books and records relating to the
Transferred Assets and the Business are complete and correct in all
material respects, accurately reflect all transactions of the
Business, and have been made available to the Buyer for examination.
Since the Balance Sheet Date:
2.5.1 there has been no change in the assets, liabilities, or
financial condition of the Seller's Systems
Effectiveness Division from that reflected in the
Balance Sheet except for changes in the ordinary course
of business consistent with past practice and which
have not been materially adverse; and
2.5.2 none of the business, prospects, financial condition,
operations, property or affairs of the Seller's Systems
Effectiveness Division has been materially adversely
affected by any occurrence or development, individually
or in the aggregate, whether or not insured against.
The Seller has disclosed to the Buyer all material
facts relating to the preparation of the Financial
Reports to the extent they relate to the Business or
the Transferred Assets.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES
The Seller is not bound by any agreement, or subject to any charter or
other corporate restriction or any legal requirement, which has, or in
the future can reasonably be expected to have, a material adverse
effect on the Business or the Transferred Assets.
2.7 LABOR AND EMPLOYEE RELATIONS
The Seller is not a party to or bound by any collective bargaining
agreement with any labor organization, group, or association covering
any of its employees, and the Seller has no knowledge of any attempt
to organize the Seller's employees by any Person, unit, or group
seeking to act as their bargaining agent. There are no pending or, to
the best knowledge of the Seller, threatened charges (by employees,
their
- 9 -
<PAGE>
representatives, or governmental authorities) of unfair labor
practices or of employment discrimination or of any other wrongful
action with respect to any aspect of employment of any person employed
or formerly employed by the Seller. To the best knowledge of the
Seller, no union representation election relating to employees of the
Seller has been scheduled by any governmental agency or authority, no
organizational effort is being made with respect to any of such
employees, and there is no investigation of the Seller's employment
policies or practices by any governmental agency or authority pending
or threatened. The Seller is not currently, nor has it been, involved
in labor negotiations with any unit or group seeking to become the
bargaining unit for any employees of the Seller. The Seller has not
experienced any material work stoppages, and to the best knowledge of
the Seller, no work stoppage is planned.
2.8 POWERS OF ATTORNEY; ABSENCE OF LIMITATIONS ON COMPETITION; GUARANTEES
With respect to the Business or the Transferred Assets, except as set
forth in SCHEDULE 2.8:
2.8.1 no power of attorney or similar authorization given by
the Seller presently is in effect or outstanding;
2.8.2 no contract or agreement to which the Seller is a party
or is bound or to which the Business or Transferred
Assets is subject limits the freedom of the Seller to
compete in any line of business or with any Person, to
the extent same relates to the Business or the
Transferred Assets; and
2.8.3 the Seller is not a party to or bound by any guarantee
of any debt or obligation of any other Person.
2.9 SIGNIFICANT CUSTOMERS
Set forth on SCHEDULE 2.9 is a true and correct list of the Seller's
six (6) largest customers of the Business for the most recent twelve
month period ending December 29, 1996 together with the amount of
services attributable to such customers expressed in dollars and as a
percentage of total sales and services. Except as set forth in
SCHEDULE 2.9, none of the customers identified on SCHEDULE 2.9 has
terminated, materially reduced, or to the best knowledge of the
Seller, threatened to terminate or materially reduce its request for
services of the Seller during the period covered by such schedule.
- 10 -
<PAGE>
2.10 GOVERNMENTAL APPROVALS/FILINGS
Except as set forth in SCHEDULE 2.10, no registration or filing by the
Seller with, or consent or approval for the Seller of or other action
by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution,
delivery, and performance by the Seller of this Agreement.
2.11 ABSENCE OF ADVERSE CHANGE; CONDUCT OF BUSINESS
During the period from the Balance Sheet Date to and including the
date of this Agreement, except as set forth on SCHEDULE 2.11, the
Seller has not, relative to the Business or the Transferred Assets:
2.11.1 borrowed or agreed to borrow any material amount of
funds or incurred any liability or obligation of any
nature (whether accrued, absolute, contingent or
otherwise), or guaranteed or agreed to guarantee any
obligations of others;
2.11.2 canceled any indebtedness owing to it or any claims
that it might have possessed, waived any material
rights of substantial value or sold, leased,
encumbered, transferred or otherwise disposed of, or
agreed to sell, lease, encumber, or otherwise dispose
of its assets or permitted any of its assets to be
subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any
kind;
2.11.3 made any material capital expenditure or commitment
therefor;
2.11.4 increased its indebtedness for borrowed money or made
any loan to any Person;
2.11.5 written off as uncollectible any notes or accounts
receivable, except write-offs in the ordinary course of
business [charged to applicable reserves]; 2.11.6 made
any material change in any method of accounting or
auditing practice;
2.11.7 otherwise conducted its business or entered into any
transaction, except in the usual and ordinary manner;
or
2.11.8 agreed, whether or not in writing, to do any of the
foregoing.
2.12 CERTAIN PRACTICES Neither the Seller, nor any of its directors or
officers, or to the best knowledge of the Seller, its employees have,
directly or indirectly, used any corporate funds for
- 11 -
<PAGE>
unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated
any provision of applicable law; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made
any false or fictitious entry on the books or records of the Seller or
any subsidiary; made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment; or made any bribe, kickback, or
other payment of a similar or comparable nature, whether lawful or
not, to any person or entity, private or public, regardless of form,
whether in money, business, or to obtain special concessions, or to
pay for favorable treatment for business secured or for special
concessions already obtained.
2.13 COMPLIANCE WITH LAW; LICENSES AND PERMITS
Except as set forth on SCHEDULE 2.13, the Seller has complied in all
material respects with all laws, ordinances, legal requirements,
rules, regulations, and orders applicable to it, its operations,
properties, assets, products, and services. Except as set forth on
SCHEDULE 2.13, there is no existing law, rule, regulation, or order,
and the Seller is not aware of any proposed law, rule, regulation, or
order, whether Federal, state, or local, which would prohibit or
materially restrict the Buyer from, or otherwise materially adversely
affect the Buyer in, conducting the Business in the manner heretofore
conducted by the Seller in any jurisdiction in which the Business is
now conducted. The Seller possesses all franchises, permits, licenses,
certificates, and consents required from any governmental or
regulatory authority in order for the Seller to carry on the Business
as currently conducted and to own and operate the Transferred Assets
as now owned and operated, the failure of which to possess would have
a material adverse effect on the Business or the Transferred Assets.
2.14 EMPLOYEE BENEFITS
2.14.1 Set forth on SCHEDULE 2.14 is a list of all pension,
profit sharing, retirement, deferred compensation,
multi employer (as defined under ERISA), stock
purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical
insurance, life insurance, fringe benefit, welfare, and
other employee benefit plans, programs, or arrangements
pursuant to which the Seller or its ERISA Affiliates
provides (directly or indirectly, individually, or
jointly through others) benefits or compensation to or
on behalf of employees or former employees of the
Seller or its ERISA Affiliates, whether formal or
informal, whether or not written ("Employee Plan"). On
request by the Buyer, the Seller shall furnish a copy
of each Employee Plan and a copy of any related
materials. The Seller will maintain the benefits listed
on SCHEDULE 2.14 in full force and effect through the
Effective Time. The Buyer shall have no obligation or
liability of any kind
- 12 -
<PAGE>
or nature for any compensation or benefits of any kind
or nature to the employees or consultants of the Seller
for services rendered prior to the Effective Time.
2.14.2 Neither the Seller nor any of its ERISA Affiliates is
or has been a participant in, or is or has been
obligated to maintain or to make contributions to, a
multi-employer plan (within the meaning of ERISA
Section 3(37) and ERISA Section 4001(a)(3)) or an
Employee Plan which is subject to Title IV of ERISA.
Neither the Seller nor any ERISA Affiliate has
sponsored, contributed to, or been obligated under
Title I or IV of ERISA to contribute to a "defined
benefit plan" (as defined in ERISA Section 3(35)).
2.14.3 Neither the Seller nor its ERISA Affiliates have
entered into any contract, agreement, or arrangement
(whether oral or written) under which the Seller or its
ERISA Affiliates have assumed any liability relating to
their clients' retirement plans, nor have the Seller
and/or its ERISA Affiliates made any verbal
representations that the use of any employees of the
Seller or its ERISA Affiliates would have no adverse
consequence on such client retirement plans.
2.14.4 Neither the Seller nor its ERISA Affiliates have
engaged in employee leasing as defined in this Section
2.14.4. Employee leasing is defined solely for purposes
of this Section 2.14.4 to mean the placement by an
employer (customer) of all or most of its existing work
force onto the payroll of an employee leasing firm and
an explicit co-employment relationship following the
termination-lease back.
2.14.5 For purposes of this Section 2.14, the term "ERISA"
shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the term "ERISA Affiliate"
shall mean each trade or business (whether or not
incorporated) which together with the Seller is treated
as a single employer under Section 414(b), (c), (m),
(o) or (t) of the Code.
2.15 FIXED ASSETS
The list of Fixed Assets for the Period Ending 08/31/97, prepared by
the Seller, contains a true and complete list of all of the Seller's
fixed assets relating to the Business, whether owned or leased. The
Seller has good and marketable title to all of its fixed assets
relating to the Business, free and clear of all claims, liens,
mortgages, charges, and encumbrances except as disclosed in the
Balance Sheet. All of the Seller's fixed assets relating to the
Business, whether owned or leased, are adequate and usable for the
purposes for which they are currently used and are in good operating
condition and repair, normal wear and tear excepted.
- 13 -
<PAGE>
2.16 INSURANCE
The Seller is, and will be through the Effective Time, insured with
insurers in respect of its properties, assets, and businesses as set
forth on the attached SCHEDULE 2.16. SCHEDULE 2.16 lists the insurance
coverage carried by the Seller, which insurance will remain in full
force and effect with respect to all events occurring prior to the
Effective Time.
2.17 OUTSTANDING CONTRACTS
SCHEDULE 2.17 sets forth a description of all existing contracts,
agreements, leases, commitments, licenses, and franchises, relating to
the Business and the Transferred Assets, which involve obligations or
commitments by the Seller of $1,000 or more and are not cancelable by
the Seller without penalty within 30 days (collectively "Contracts"),
whether written or oral. The Seller has delivered or made available to
the Buyer true, correct, and complete copies of all of the Contracts
specified on SCHEDULE 2.17 which are in writing, and such schedule
sets forth a complete description of all Contracts which are not in
writing. All of the Contracts are in full force and effect and
enforceable in accordance with their terms, except to the extent that
the enforceability thereof may be subject to or affected by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of
creditors generally. Except as set forth on SCHEDULE 2.17, the Seller
and, to the best knowledge of the Seller, each other party thereto has
materially performed all the obligations required to be performed by
it, has received no notice of default, and is not in default (with due
notice or lapse of time or both) under any of the Contracts.
The Seller has no present expectation or intention of not fully
performing all its obligations under each of the Contracts, and the
Seller has no knowledge of any breach or anticipated breach by the
other party to any of the Contracts to which the Seller is a party.
Except as set forth on SCHEDULE 2.17, none of the Contracts has been
terminated; no notice has been given by any party thereto of any
alleged default by any party thereunder; and the Seller is not aware
of any intention or right of any party to declare another party to any
of the Contracts to be in default. Except as set forth on SCHEDULE
2.17, there exists no actual or, to the best knowledge of the Seller,
threatened termination, cancellation, or limitation of the business
relationship of the Seller by any party to any of the Contracts.
2.18 OUTSTANDING LEASES
SCHEDULE 2.18 sets forth a description of each agreement by which the
Seller leases each parcel of real property (the "Leased Parcels") used
in connection with the
- 14 -
<PAGE>
Business (collectively, the "Leases"). The Seller has delivered or
made available to the Buyer true, correct, and complete copies of all
of the Leases specified on SCHEDULE 2.18. All rents due under the
Leases have been paid. All of the Leases are in full force and effect
and enforceable in accordance with their terms, except to the extent
that the enforceability thereof may be subject to or affected by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the
rights of creditors generally. Except as set forth on SCHEDULE 2.18,
the Seller and, to the best knowledge of the Seller, each other party
thereto has performed all the obligations required to be performed by
it, has received no notice of default, and is not in default (with due
notice or lapse of time or both) under any of the Leases. The Seller
has no present expectation or intention of not fully performing all
its obligations under each of the Leases prior to the Effective Time,
and the Seller has no knowledge of any breach or anticipated breach by
the other party to any of the Leases. Except as set forth on SCHEDULE
2.18, none of the Leases has been terminated; no notice has been given
by any party thereto of any alleged default by any party thereunder;
and the Seller is not aware of any intention or right of any party to
declare another party to any of the Leases to be in default. There
exists no actual or, to the best knowledge of the Seller, threatened
termination, cancellation, or limitation of the business relationship
of the Seller with any party to any of the Leases.
2.19 INTELLECTUAL PROPERTIES
SCHEDULE 2.19 contains an accurate and complete list of all domestic
and foreign letters patent, patents, patent applications, patent
licenses, software licenses and know-how licenses, trade names,
trademarks, copyrights, unpatented inventions, service marks,
trademark registrations and applications, service mark registrations
and applications and copyright registrations and applications, trade
secrets, or other confidential proprietary information owned or used
by the Seller in the operation of the Business (collectively the
"Intellectual Property"). Except as set forth on SCHEDULE 2.19 and
except for commercial software licensed for use on personal computers,
the Seller owns the entire right, title, and interest in and to the
Intellectual Property, trade secrets, and technology used in the
operation of its business. Except as set forth on SCHEDULE 2.19, there
have been and are no pending or, to the best knowledge of the Seller,
threatened proceedings or litigation or other adverse claims affecting
or with respect to the Intellectual Property. There is, to the best
knowledge of the Seller, no reasonable basis upon which a claim may be
asserted against the Seller for infringement of any domestic or
foreign letters patent, patents, patent applications, patent licenses
and know-how licenses, trade names, trademark registrations and
applications, common law trademarks, service marks, service mark
registrations or applications or copyrights, copyright registrations
or applications, trade secrets, or other confidential proprietary
information. To the best knowledge of the Seller, no Person is
infringing the Intellectual Property.
- 15 -
<PAGE>
2.20 PROPRIETARY INFORMATION OF THIRD PARTIES
Except as disclosed on SCHEDULE 2.20, no third party has claimed or,
to the best knowledge of the Seller, has reason to claim that any
Person employed by or consulting with the Seller ("Related Person")
has:
2.20.1 violated or may be violating any of the terms or
conditions of such person's employment,
non-competition, or non-disclosure agreement with such
third party;
2.20.2 disclosed or may be disclosing or utilized or may
be utilizing any trade secret or proprietary
information or documentation of such third party, or
2.20.3 interfered or may be interfering in the employment
relationship between such third party and any of its
present or former employees. No third party has
requested information from the Seller which suggests
that such a claim might be contemplated. Except as
disclosed on SCHEDULE 2.20, to the best knowledge of
the Seller, no Related Person has employed or proposes
to employ any trade secret or any information or
documentation proprietary to any former employer and,
no Related Person has violated any confidential
relationship which such person may have had with any
third party, in connection with the development, or
sale of any service of the Seller, and the Seller has
no reason to believe there will be any such employment
or violation.
2.21 TRANSACTIONS WITH AFFILIATES
No director, officer or shareholder of the Seller, or member of the
family of any such person, or any corporation, partnership, trust, or
other entity controlled by any of the foregoing persons, is a party to
any transaction with the Seller relating to the Business or the
Transferred Assets, including any contract, agreement, or other
arrangement providing for the employment of, furnishing of services
by, rental of real or personal property from, or otherwise requiring
payments or involving other obligations to any such person or firm.
2.22 TAXES
Except as set forth on SCHEDULE 2.22, all federal, state, local, and
foreign tax returns and tax reports required to be filed by the Seller
on or before the date hereof have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such
returns and reports are required to be filed and all amounts shown as
owing thereon have been paid. All taxes (including, without
limitation, income,
- 16 -
<PAGE>
accumulated earnings, property, sales, use, franchise, value added,
fuel, employees' income withholding, and social security taxes) which
have become due or payable or are required to be collected by the
Seller or are otherwise attributable to any periods ending at or
before the Effective Time and all interest and penalties thereon,
whether disputed or not, have been paid or will be paid in full or
adequately and properly reflected on the Balance Sheet or the Seller's
books and records on or prior to the Closing Date. Except as set forth
on SCHEDULE 2.22, all deposits required by law to be made by the
Seller with respect to employees' withholding taxes have been duly
made, and as of the Closing Date all such deposits due will have been
made. Except as set forth on SCHEDULE 2.22, no examination of any tax
return of the Seller is currently in progress. There are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any such tax return.
2.23 LITIGATION
With respect to the Business or the Transferred Assets, or arising out
of or in any way relating to the Transferred Assets, except as set
forth on SCHEDULE 2.23, there is no:
2.23.1 action, suit, claim, proceeding, or investigation
pending or, to the best knowledge of the Seller,
threatened against or affecting the Seller (whether or
not such the Seller is a party or prospective party
thereto), at law or in equity, or before or by any
Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or
instrumentality, domestic or foreign;
2.23.2 arbitration proceeding pending relating to the Seller;
2.23.3 governmental inquiry pending or threatened against or
involving the Seller, and there is no basis for any of
the foregoing. The Seller has not received any opinion
or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to
any liability or disadvantage by reason of any specific
action or inaction on the part of the Seller which may
be material to the business, prospects, financial
condition, operations, property or affairs of the
Seller; or
2.23.4 other claim that would materially or adversely affect
the Business or the Transferred Assets
There are no outstanding orders, writs, judgments, injunctions, or
decrees served upon the Seller by any court, governmental agency, or
arbitration tribunal against the Seller. There are no facts or
circumstances which may result in institution of any action, suit,
claim, or legal, administrative, or arbitration proceeding or
investigation
- 17 -
<PAGE>
against, involving, or affecting the Seller or the transactions
contemplated hereby. The Seller is not in default with respect to any
order, writ, injunction, or decree known to or served upon it from any
court or of any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality,
domestic or foreign. With respect to the Business or the Transferred
Assets, except as disclosed on SCHEDULE 2.23, there is no action or
suit by the Seller pending or threatened against others.
2.24 ENVIRONMENTAL MATTERS
2.24.1 COMPLIANCE
The Seller and all those properties the leases
for which are contained on SCHEDULE 2.18 (the
"Leased Parcels") are in compliance with all applicable
laws, rules, regulations, orders, ordinances,
judgments, and decrees of all governmental authorities
with respect to all environmental statutes, rules, and
regulations. Except as set forth on SCHEDULE 2.24, the
Seller has not received notice of, nor does the Seller
have knowledge of, any past, present, or future events,
conditions, circumstances, activities, practices,
incidents, actions, or plans of the Seller or the
Seller's predecessors, either collectively,
individually, or severally, which may interfere with or
prevent continued compliance with, or which may give
rise to any common law or legal liability or otherwise
form the basis of any claim, action, suit, proceeding,
hearing, or investigation, based on or related to the
disposal, storage, handling, manufacture, processing,
distribution, use, treatment, or transport, or the
emission, discharge, release, or threatened release
into the environment, of any Substance. As used in this
Section 2.24, the term "Substance" or "Substances"
shall mean any pollutant, hazardous substance,
hazardous material, hazardous waste, or toxic waste, as
defined in any presently enacted federal, state, or
local statute or any regulation that has been
promulgated pursuant thereto. No part of any of the
Leased Parcels has been listed or proposed for listing
on the National Priorities List established by the
United States Environmental Protection Agency, or any
other such list by any federal, state, or local
authorities.
2.24.2 ENVIRONMENTAL SUBSTANCE LIABILITY
No event has occurred or condition exists or operating
practice is being employed that could give rise to
liability on the part of the Seller, either at the
present time or in the future, for any losses,
liabilities, damages (whether consequential or
otherwise), settlements, penalties, interest, expenses,
and costs of responses, including any such liability on
account of the right of any governmental or private
entity or person, and including closure expenses,
- 18 -
<PAGE>
costs of assessment, containment, removal, or response
(other than monitoring or transportation or disposal of
materials required to be transported or disposed of in
the ordinary course of business consistent with past
practice) arising under any rule or federal, state, or
local statute, or any regulation that has been
promulgated pursuant thereto, or common law, as a
result of or in connection with, or alleged to be as a
result of or in connection with, the following:
2.24.2.1 the handling, storage, use,
transportation, or disposal of any
Substances in or near or from the
Leased Parcels;
2.24.2.2 the handling, storage, use,
transportation, or disposal of any
Substances by the Seller or its
predecessors which Substances were a
product, by-product, or otherwise
resulted from the operations conducted
by or on behalf of the Seller or its
predecessors;
2.24.2.3 any intentional or unintentional
emission, discharge, or release of any
Substances in or near or from facilities
into or upon the air, surface water,
ground water, or land or any disposal,
handling, manufacturing, processing,
distribution, use, treatment, or
transport of such Substances in or near
or from facilities by or on behalf of
the Seller or its predecessors; or
2.24.2.4 the presence of any toxic or hazardous
building materials (including but not
limited to asbestos or similar
substances) in any facilities of the
Seller, including but not limited to the
inclusion of such materials in the
exterior and interior walls, floors,
ceilings, tile, insulation or any other
portion of building structures.
2.24.3 ENVIRONMENTAL PERMITS
The Seller has obtained and holds all registrations,
permits, licenses, and approvals issued by or on behalf
of any federal, state, or local governmental body or
agency if any ("Environmental Permits") that are
required in connection with the operation by the Seller
of the Leased Parcels, the discharge or emission of
Substances by the Seller from the Leased Parcels, or
the generation, treatment, storage, transportation, or
disposal of any such Substances by the Seller. Such
Environmental Permits, which are described on SCHEDULE
2.24, are currently effective and sufficient for the
operation of the Leased Parcels and the business of the
Seller as currently conducted and intended to be
conducted. The Seller is in compliance with all terms
and
- 19 -
<PAGE>
conditions of the Environmental Permits, and is also in
compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in
those laws or provisions or contained in any
regulation, code, plan, order, decree, judgment,
notice, or demand letter issued, entered, promulgated,
or approved thereunder and applicable to the Seller.
2.25 BROKER'S OR FINDER'S FEES
No agent, broker, person, or firm acting on behalf of Seller is, or
will be, entitled to any commission or broker's or finder's fees from
the Seller or from any person controlling, controlled by, or under
common control with the Seller in connection with any of the
transactions contemplated herein.
2.26 DISCLOSURE
All Documents delivered or to be delivered by or on behalf of the
Seller in connection with this Agreement and the transactions
contemplated hereby are true, complete, and correct in all material
respects. Neither this Agreement, nor any of the other Documents
contains any untrue statement of a material fact or omits a material
fact necessary to make the statements made by Seller herein or
therein, in light of the circumstances in which made, not misleading.
There is no fact known to the Seller which materially and adversely
affects the business, prospects or financial condition of the Seller
or its properties or assets, which has not been set forth in the
Documents.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents
and warrants to the Seller, as of the date hereof and as of the
Closing Date, as follows:
3.1 ORGANIZATION
The Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the Commonwealth of Virginia and is
duly qualified to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material
adverse impact on the Buyer's ability to purchase the Business and the
Transferred Assets pursuant to this Agreement and to perform its
obligations under this Agreement and the other Documents.
- 20 -
<PAGE>
3.2 CORPORATE POWER AND AUTHORITY
The Buyer has the corporate power and authority to execute, deliver,
and perform this Agreement and the other Documents. The execution,
delivery, and performance of the Documents contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized and approved by all necessary corporate and
shareholder action of the Buyer. The Documents to be executed and
delivered by the Buyer have been duly executed and delivered by, and
constitute the legal, valid, and binding obligation of, the Buyer
enforceable against the Buyer in accordance with their terms.
3.3 VALIDITY, ETC.
Neither the execution and delivery by the Buyer of this Agreement and
the other Documents, the consummation by the Buyer of the transactions
contemplated hereby or thereby, nor the performance by the Buyer of
this Agreement and such other agreements in compliance with the terms
and conditions hereof and thereof will:
3.3.1 violate, conflict with, or result in any breach of any
trust agreement, articles of incorporation, bylaw,
judgment, decree, order, statute, or regulation
applicable to the Buyer;
3.3.2 violate, conflict with, or result in a breach of or
default (or give rise to any right of termination,
cancellation, or acceleration) under any law, rule, or
regulation or any judgment, decree, order, governmental
permit, license, or order or any of the terms,
conditions, or provisions of any mortgage, indenture,
note, license, agreement, or other instrument to which
the Buyer is a party; or
3.3.3 violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to the Buyer.
3.4 BROKER'S OR FINDER'S FEES
No agent, broker, person, or firm acting on behalf of the Buyer is, or
will be, entitled to any commission or broker's or finder's fees from
the Buyer, or from any person controlling, controlled by, or under
common control with the Buyer, in connection with any of the
transactions contemplated herein.
3.5 DISCLOSURE
All Documents delivered or to be delivered by or on behalf of the
Buyer in connection with this Agreement and the transactions
contemplated hereby are true,
- 21 -
<PAGE>
complete, and correct in all material respects. Neither this
Agreement, nor any of the other Documents, contains any untrue
statement of a material fact or omits a material fact necessary to
make the statements made by the Buyer herein or therein, in light of
the circumstances in which made, not misleading. There is no fact
known to the Buyer which may have a material adverse effect on the
Buyer's ability to pay its obligations under this Agreement, which has
not been set forth in the Documents.
4. COVENANTS AND AGREEMENTS
4.1 COOPERATION
Each of the parties hereto shall use their best efforts in
good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder to
the end that the transactions contemplated hereby will be
fully and timely consummated. With respect to each of the
Contracts listed on SCHEDULE 1.2 which have been novated in
the Buyer's name in accordance with this Agreement, the
parties further agree to cooperate with respect to any DCAA or
other governmental audit, in the preparation and collection of
final billings and in the preparation of incurred cost
submissions. The Buyer further agrees to make available for
inspection by the Seller upon reasonable request and during
normal business hours, the books and records relating to the
Business which are delivered to the Seller pursuant to this
Agreement and, at the Seller's expense, make reasonable
efforts to make former employees of the Seller currently
employed by the Buyer at the time of the Seller's request
available to the Seller with respect to any DCAA or other
governmental audits of the Seller.
4.2 BEST EFFORTS
The Seller and the Buyer shall each use its best efforts to
procure upon reasonable terms and conditions all consents and
approvals, completion of all filings, all registrations, and
certificates, and satisfaction of all other requirements
prescribed by law which are necessary for the consummation of
the transactions contemplated by this Agreement and the
Buyer's ownership and operation of the Seller's Business after
the Closing Date. Prior to the Closing Date, the Seller will
use its best efforts to preserve its relationships with its
employees, customers, and others having business relationships
with the Seller.
4.3 TAX RETURNS
The Seller shall cause to be prepared and timely filed, at its
sole expense, all of its required tax returns for all periods
ending on or prior to the Effective Date. The Seller shall be
responsible for the payment of, and will indemnify, defend and
hold the Buyer harmless against all taxes due or assessed
which relate to the operations
- 22 -
<PAGE>
of the Business for all periods ending on or prior to the
Effective Date.
4.4 INVESTIGATIONS
Prior to the Closing Date, the Seller shall give the Buyer and
its employees, accountants, attorneys, and other authorized
representatives full access during all reasonable times to all
the premises, properties, books, and records of the Seller
relating in any way to the Business or the Transferred Assets,
and furnish the Buyer with such financial and operating data,
analyses, and other information reasonably requested
respecting the Business and the Transferred Assets as the
Buyer shall from time to time request. Any investigation shall
be conducted in a manner which does not unreasonably interfere
with business operations.
4.5 CONDUCT OF BUSINESS IN THE ORDINARY COURSE
From the Effective Date until Closing, the Seller has
conducted and shall conduct the Business only in the ordinary
course. By way of amplification and not limitation, except as
otherwise provided herein, the Seller shall not, without the
prior written consent of the Buyer, do any of the following to
the extent any of the following have an adverse effect on the
Business or the Transferred Assets:
4.5.1 borrow or agree to borrow any material amount of
funds or incur any liability or obligation of any
nature (whether accrued, absolute, contingent, or
otherwise), or guarantee or agree to guarantee any
obligations of others;
4.5.2 cancel any indebtedness owing to it or any claims
that it might possess, waive any material rights of
substantial value, or sell, lease, encumber,
transfer, or otherwise dispose of, or agree to sell,
lease, encumber, or otherwise dispose of its assets
or permit any of its assets to be subjected to any
mortgage, pledge, lien, security interest,
encumbrance, restriction, or charge of any kind;
4.5.3 make any material capital expenditure or commitment
therefor;
4.5.4 increase its indebtedness for borrowed money or make
any loan to any Person;
4.5.5 write off as uncollectible any notes or accounts
receivable, except write-offs in the ordinary course
of business charged to applicable reserves;
4.5.6 make any material change in any method of accounting
or auditing practice;
- 23 -
<PAGE>
4.5.7 otherwise conduct its business or enter into any
transaction, except in the usual and ordinary manner;
or
4.5.8 agree, whether or not in writing, to do any of the
foregoing.
4.6 PRESERVATION OF BUSINESS
Prior to the Closing Date, the Seller shall use its best
efforts to preserve the possession and control of all of the
Transferred Assets and the Business, to preserve the goodwill
of its customers and others with whom it has business
relations, and to do nothing to impair the ability to keep and
preserve its Business as it exists on the date of this
Agreement.
4.7 NOTIFICATION OF MATERIAL CHANGES AND LITIGATION
During the period from the date of this Agreement to the
Closing Date, the Seller shall provide the Buyer with prompt
written notice, accompanied by a detailed description and
analysis to the extent the Transferred Assets or the Business
are adversely effected:
4.7.1 of any material adverse, or to the best knowledge of
the Seller, potentially material adverse change in
the condition, earnings, or business of the Seller;
4.7.2 of any event or condition of any character (whether
actual or, to the best knowledge of the Seller,
threatened) pertaining to the financial condition,
business, or assets of the Seller that has materially
and adversely affected, or has a substantial
possibility of materially and adversely affecting,
any of such financial condition, business, or assets,
or causing any of such business to be carried on
materially less profitably than prior to the date of
this Agreement; and
4.7.3 of all claims, regulatory proceedings, and litigation
(whether actual or, to the best knowledge of the
Seller, threatened and whether or not material)
against or possibly involving the Seller or (where
such actual or threatened claims, regulatory
proceedings or litigation arise in connection with
actions taken or alleged to be taken by any officer,
employer, or director of the Seller) in any capacity
as an officer, employee, or director of the Seller.
Such adverse or potentially adverse material changes or such
claims, proceedings, or litigation shall include, without
limitation, any adverse or potentially adverse material change
in or any litigation arising in connection with any item or
matter reported on any schedule, exhibit, or document
delivered by the Seller to the Buyer in connection with this
Agreement.
- 24 -
<PAGE>
4.8 PAYMENT OF LIABILITIES
Except for the Assumed Liabilities, the Seller shall pay and
satisfy in full all of its other obligations and liabilities
relating to the Business or the Transferred Assets, of any
nature whatsoever, which accrue prior or subsequent to the
Effective Date.
4.9 EMPLOYEES AND CONSULTANTS
The Buyer and the Seller have determined in good faith that
the closing of the transactions contemplated by this Agreement
will not result in an "employment loss" within the meaning of
the Workers Adjustment Retraining and Notification act, 29
U.S.C. ss. 2101 ET SEQ (the "Warn Act"). The Seller has made
all of its employees and consultants available to be hired by
the Buyer. Notwithstanding the foregoing and except as
otherwise set forth in this Agreement, the Buyer shall be
under no obligation to hire any such employees and
consultants. The Buyer and the Seller understand and
acknowledge that each is an employer subject to the Warn Act.
The Seller shall be responsible for any Warn Act violations
based on or arising from acts, events, or omissions prior to
the Closing, and the Buyer shall be responsible for any Warn
Act violations based on or arising from acts, events, or
omissions after the Closing. At the Closing, the Seller shall
provide to the Buyer a list of all employees or former
employees terminated by the Seller during the ninety (90) day
period prior to the Closing. Nothing herein shall be deemed
either to affect or to limit in any way the management
prerogatives of the Buyer with respect to employees, or to
create or to grant to such employees any third party
beneficiary rights or claims or causes of action of any kind
or nature.
4.10 BILLED ACCOUNTS RECEIVABLE
The Seller shall assign to the Buyer, pursuant to the
Assignment and Assumption Agreement to be executed on the
Closing Date in substantially the form attached hereto as
EXHIBIT B, all rights to collect all amounts due it on account
of the Business and the Transferred Assets, which accrued
prior to the Effective Time, except for Excluded Assets, and
except for the work properly performed by the Seller on
contracts to be novated during the period commencing at the
Effective Time through the date(s) of novation. The Buyer
shall have the right to retain all such amounts collected.
Upon the expiration of the sixty (60) day period following the
Closing Date, the Buyer shall transfer back to the Seller the
right to collect all of the foregoing amounts that remain
uncollected as of such date and the Purchase Price shall be
reduced, dollar for dollar, by the amount so transferred back
to the Seller, such reduction to be reflected in a reduction
in the principal amount of the Promissory Note or by a
certified check delivered by the Seller to the Buyer at the
time of such transfer.
- 25 -
<PAGE>
5. CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Seller pursuant
to Sections 1.2 and 1.3 hereof and to consummate the other transactions
contemplated hereby is subject to the satisfaction, on or before the
Closing Date, of the following conditions each of which may be waived
by the Buyer in its sole discretion:
5.1 CONSENTS
Except as set forth on SCHEDULE 5.1, all requisite
governmental approvals and consents of third parties
identified on such schedule or otherwise identified by the
Seller as required to be received to prevent any material
license, permit, or agreement relating to the Business from
terminating prior to its scheduled termination, as a result of
the consummation of the transactions contemplated hereby,
shall have been obtained and all permits related to any of the
foregoing shall have been transferred or reissued to the
Buyer.
5.2 [RESERVED]
5.3 NOVATION OF CONTRACTS
The Seller shall have demonstrated to the Buyer's reasonable
satisfaction that it has diligently pursued novation of the
contracts listed in SCHEDULE 5.3, such pursuit to include the
filing of all documentation, submission of all information,
and payment of any and all fees required by the contracting
agency in connection with such novation.
5.4 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Seller set forth in
Article 2 of this Agreement shall be true and correct in all
material respects, without any exceptions thereto except as
otherwise stated therein which would materially and adversely
affect the Business and the Transferred Assets.
5.5 [reserved].
5.6 OPINION OF COUNSEL TO THE SELLER
The Buyer shall have received from Messrs. De Martino,
Finkelstein, Rosen & Virga, counsel to the Seller, an opinion,
dated as of the Closing Date, in form and substance reasonably
satisfactory to the Buyer, and to the following effect to the
best knowledge of counsel.
- 26 -
<PAGE>
5.6.1 The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the
Commonwealth of Virginia and is in good standing
under the laws of the Commonwealth of Virginia, and
the States of Florida, New Mexico, and Alabama. The
nature of the Business or the Transferred Assets does
not require the Seller to be licensed or qualified in
any other jurisdiction in which the failure to so
qualify would have a material adverse effect on the
Business or the Transferred Assets;
5.6.2 The Seller has the corporate power and authority to
own and hold its properties and to carry on its
business as now conducted. The Seller has the
corporate power and authority to execute, deliver,
and perform the Agreement and the other Documents.
The execution, delivery, and performance of the
Agreement and the other Documents and the
consummation of the transactions contemplated hereby
and thereby have been duly authorized and approved by
all necessary corporate action of the Seller. The
Agreement and each of the other Documents to be
executed and delivered by the Seller have been duly
executed and delivered by, and constitute the legal,
valid, and binding obligation of the Seller,
enforceable against the Seller in accordance with
their terms;
5.6.3 [RESERVED]
5.6.4 With respect to the Business or Transferred Assets,
there is no:
5.6.4.1 action, suit, claim, proceeding, or
investigation pending or, to the best
knowledge of Counsel, threatened against
or affecting the Seller (whether or not
the Seller is a party or prospective
party thereto), at law or in equity, or
before or by any Federal, state,
municipal, or other governmental
department, commission, board, bureau,
agency, or instrumentality, domestic or
foreign;
5.6.4.2 arbitration proceeding pending relating
to the Seller;
5.6.4.3 governmental inquiry pending or
threatened against or involvin the
Seller, and, to the best knowledge of
counsel, there is no basis for any of
the foregoing. The Seller has not
received any opinion or memorandum or
legal advice from DeMartino,Finkelstein,
Rosen & Virga, or to the best of its
knowledge from any other legal counsel
to the effect that it is exposed, from a
legal standpoint, to any liability or
legal disadvantage which may be material
to the business, prospects, financial
condition, operations, property, or
affairs of the Business. There are no
outstanding orders, writs, judgments,
injunctions, or decrees
- 27 -
<PAGE>
served upon the Seller by any court,
governmental agency, or arbitration
tribunal against the Seller. To the
knowledge of counsel, there are no facts
or circumstances which may result in
institution of any action, suit, claim
or legal, administrative or arbitration
proceeding or investigation against,
involving, or affecting the transactions
contemplated hereby; or
5.6.4.4 other Claims that would materially or
adversely affect the Business or the
Transferred Assets.
5.6.5 The execution and delivery of this Agreement and the
other Documents, the consummation of the transactions
contemplated hereby and thereby, and the performance
of the Agreement and such other agreements in
compliance with the terms and conditions hereof and
thereof by the Seller will not:
5.6.5.1 violate, conflict with or result in any
breach of any trust agreement, articles
of incorporation, bylaw, judgment,
decree, order, statute or regulation
applicable to the Seller;
5.6.5.2 violate, conflict with or result in a
breach, default or termination or give
rise to any right of termination,
cancellation or acceleration of the
maturity of any payment date of any of
the obligations of the Seller or
increase or otherwise affect the
obligations of the Seller under any law,
rule, regulation or any judgment,
decree, order, governmental permit,
license or order or any of the terms,
conditions or provisions of any
mortgage, indenture, note, license,
agreement or other instrument or
obligation related to the Seller or to
the Seller's ability to consummate the
transactions contemplated hereby or
thereby, except for such defaults (or
rights of termination, cancellation or
acceleration) a to which requisite
waivers or consents have been obtained
in writing and provided to the Buyer; or
5.6.5.3 result in the creation of any Claim upon
the Transferred Assets; and
5.6.6 The Bill of Sale conveys all right, title, and
interest in and to the Transferred Assets.
5.7 CLOSING DOCUMENTS
The Seller shall have delivered all of the resolutions,
certificates, documents, and instruments required by this
Agreement.
- 28 -
<PAGE>
5.8 APPROVAL OF THE BUYER AND ITS COUNSEL
All actions, proceedings, consents, instruments, and documents
required to be delivered by, or at the behest or direction of,
the Seller hereunder or incident to its performance hereunder,
and all other related matters, shall, except to the extent the
form of same is specified in the Documents, be reasonably
satisfactory as to form and substance to the Buyer and its
counsel.
6. CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to transfer the Transferred Assets to the
Buyer and to consummate the other transactions contemplated hereby is
subject to the satisfaction, on or before the Closing Date, of the
following conditions, each of which may be waived by the Seller in its
sole discretion:
6.1 OPINION OF COUNSEL TO THE BUYER
The Seller shall have received from Arent Fox Kintner Plotkin
& Kahn, counsel to the Buyer, an opinion, dated as of the
Closing Date, in form and substance reasonably satisfactory to
the Seller, to the effect that this Agreement has been duly
authorized, executed, and delivered by the Buyer.
6.2 CLOSING DOCUMENTS
The Buyer shall have delivered all of the resolutions,
certificates, documents, and instruments required by this
Agreement.
6.3 APPROVAL OF THE SELLER AND ITS COUNSEL
All actions, proceedings, consents, instruments, and documents
required to be delivered by, or at the behest or direction of,
the Buyer hereunder or incident to its performance hereunder,
and all other related matters, shall be reasonably
satisfactory as to form and substance to the Seller and its
counsel.
7. THE CLOSING AND CERTAIN CLOSING DELIVERIES
7.1 TIME AND PLACE OF CLOSING
Upon the terms and subject to the satisfaction or waiver of
the conditions contained in this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Arent Fox Kintner Plotkin &
Kahn, 1050 Connecticut Avenue, N.W., Washington, D.C.
20036-5339, on 16 October,
- 29 -
<PAGE>
1997, 10 a.m. or on such other date and time as may be mutually
agreed upon by the parties prior to 16 October, 1997 (the
"Closing Date"). The transactions contemplated by this
Agreement shall be effective as of 12:01 a.m. (the "Effective
Time") on 1 October, 1997 (the "Effective Date") except as
otherwise specifically set forth in this Agreement.
7.2 DELIVERIES BY THE SELLER
At the Closing, the Seller will deliver or cause to be
delivered to the Buyer the following:
7.2.1 All required consents of third parties to the sale,
conveyance, transfer, assignment, and delivery of the
Transferred Assets and the Business of the Seller
hereunder;
7.2.2 A certificate of the Secretary (or, if authorized,
the Assistant Secretary) of the Seller certifying as
of the Closing Date the following:
7.2.2.1 a true, correct, and complete copy of
the Articles of Incorporation of the
Seller and all amendments thereto as in
effect on the Closing Date;
7.2.2.2 a true, correct, and complete copy of
the By-laws of the Seller and all
amendments thereto as in effect on the
Closing Date;
7.2.2.3 a true, correct, and complete copy of
the resolutions approved and adopted by
the Seller's Board of Directors
authorizing and approving the execution,
performance and delivery of this
Agreement and the transactions
contemplated by this Agreement; and
7.2.2.4 the incumbency of the duly authorized
officers of the Seller.
7.2.3 A Certificate of Good Standing from each of (i) the
Commonwealth of Virginia, (ii) the State of Florida,
(iii) the State of New Mexico, and (iv) the State of
Alabama.
7.2.4 The affidavit of the Seller certifying as to its
non-foreign status in accordance with Section
1445(b)(2) of the Internal Revenue Code substantially
in the form of EXHIBIT H.
7.2.5 The Bill of Sale required by Section 1.1.5;
- 30 -
<PAGE>
7.2.6 The Assignment and Assumption Agreement required by
Section 1.1.5;
7.2.7 The Lease Assignment and Assumption Agreement
required by Section 1.1.5;
7.2.8 Evidence of termination of existing employment
arrangements if any;
7.2.9 The opinion of the Seller's counsel required by
Section 5.6 above; and
7.2.10 The Subordination Agreement required by Section 1.6;
7.2.11 The Escrow Agreement required by Section 1.2.7;
7.2.12 A Certification of Delivery listing and attaching
true, correct and complete copies of certain of the
documents referenced in this Agreement (including all
Exhibits and Schedules hereto) but not attached
hereto (all of such documents being incorporated
herein by reference);
7.2.13 All other documents, instruments, and writings
required to be delivered by the Seller at or prior to
the Closing Date pursuant to this Agreement or
otherwise required in connection herewith.
7.3 DELIVERIES BY THE BUYER
At the Closing, the Buyer will deliver the following to or for
the account of the Seller or certain of its employees, as the
case may be:
7.3.1 The payments required by Sections 1.2.5 above;
7.3.2 The Promissory Note of the Buyer required by Section
1.2.6 above;
7.3.3 The Assignment and Assumption Agreement required by
Section 1.3;
7.3.4 The Lease Assignment and Assumption Agreement
required by Section 1.3;
7.3.5 [reserved];
7.3.6 The Opinion of the Buyer's counsel required by
Section 6.1 above;
7.3.7 A certificate of an officer of the Buyer certifying,
as of the Closing Date, a true, correct, and complete
copy of the resolutions approved and adopted by the
Board of Directors of the Buyer authorizing the
transactions contemplated herein; and
- 31 -
<PAGE>
7.3.8 The Security Agreement required by Section 1.5;
7.3.9 The Escrow Agreement required by Section 1.2.7;
7.3.10 All other documents, instruments, and writings
required to be delivered by the Buyer at or prior to
the Closing Date pursuant to this Agreement or
otherwise required in connection herewith.
8. INDEMNIFICATION
8.1 SURVIVAL
All representations and warranties in this Agreement and the
other Documents shall survive the Closing of the transactions
contemplated by this Agreement and any investigation at any
time made by or on behalf of any party for a period of two and
one half (2 1/2) years (i. e. 912 days) and all such
representations and warranties shall expire 2 1/2 years after
the Closing Date, except that:
8.1.1 claims, if any, asserted in writing prior to the end
of such 2 1/2 year period identified as a claim for
indemnification pursuant to this Section 8 shall
survive until finally resolved and satisfied in full;
and
8.1.2 tax or environmental claims arising from a breach of
Sections 2.24 and 2.26, respectively, shall survive
for the full period of the applicable statute of
limitations, and until finally resolved and satisfied
in full if asserted on or prior to the expiration of
any such period. The representations and warranties
shall not be affected or otherwise diminished by any
investigation at any time by or on behalf of the
party for whose benefit such representations and
warranties were made.
8.2 INDEMNIFICATION BY SELLER
Subject to the terms herein, the Seller shall indemnify,
defend, and hold the Buyer and the respective officers,
directors, and employees of the Buyer, and their successors
and assigns (the "Seller's Indemnitees") harmless from,
against and with respect to any claim, liability, obligation,
loss, damage, assessment, judgment, cost, and expense of any
kind or character (the "Damages"), arising out of or in any
manner incident, relating or attributable to:
8.2.1 Any material inaccuracy in any representation or
breach of any warranty of the Seller contained in
this Agreement;
- 32 -
<PAGE>
8.2.2 Any material failure by the Seller to perform or
observe, or to have performed or observed, in full,
any covenant, agreement, or condition to be performed
or observed by it under this Agreement;
8.2.3 Reliance by the Buyer on any books or records of the
Seller or written information furnished to the Buyer
pursuant to this Agreement by or on behalf of the
Seller in the event that such books and records or
written information are false or inaccurate excluding
things that are reasonably estimated; or
8.2.4 Liabilities or obligations of, or claims against, the
Buyer (whether absolute, accrued, contingent or
otherwise) relating to, or arising out of, the
operation of the Business prior to the Closing Date
or facts and circumstances relating specifically to
the Business, the Leased Parcels, or the Seller
existing at or prior to the Closing Date, whether or
not such liabilities, obligations or claims were
known on such date, excluding only the Assumed
Liabilities.
8.3 NOTICE TO SELLER
If any of the matters as to which the Seller's Indemnitees are
entitled to receive indemnification under Section 8.2 should
entail litigation with or claims asserted by parties other
than the Seller, the Seller shall be given prompt notice
thereof and shall have the right, at his expense, to control
such claim or litigation upon prompt notice to the Buyer of
his election to do so. To the extent requested by the Seller,
the Buyer, at its expense, shall cooperate with and assist the
Seller, in connection with such claim or litigation. The Buyer
shall have the right to appoint single counsel to consult with
and remain advised by the Seller in connection with such claim
or litigation. The Seller shall have final authority to
determine all matters in connection with such claim or
litigation; provided, however, that the Seller shall not
settle any third party claim without the consent of the Buyer,
which shall not be unreasonably denied or delayed.
8.4 INDEMNIFICATION BY BUYER
Subject to the terms herein, the Buyer shall indemnify,
defend, and hold the Seller and the respective officers,
directors, and employees of the Seller and its successors and
assigns (the "Buyer's Indemnitees") harmless from, against,
and with respect to any claim, liability, obligation, loss,
damage, assessment, judgment, cost, and expense of any kind or
character (the "Damages"), arising out of or in any manner
incident, relating, or attributable to:
8.4.1 Any inaccuracy in any representation or breach of
warranty of the Buyer contained in this Agreement;
- 33 -
<PAGE>
8.4.2 Any failure by the Buyer to perform or observe, or to
have performed or observed, in full, any covenant,
agreement or condition to be performed or observed by
it under any of the Documents;
8.4.3 Reliance by the Seller on any books or records of the
Buyer or reliance by the Seller on any written
information furnished to the Seller pursuant to this
Agreement by or on behalf of the Buyer in the event
that such books and records or written information
are false or inaccurate;
8.4.4 The failure of the Buyer to pay or perform the
Assumed Liabilities, Contracts and Leases subsequent
to the Closing Date; or
8.4.5 Liabilities or obligations of, or claims against, the
Seller (whether absolute, accrued, contingent or
otherwise) relating to, or arising out of, the
operation of the Business subsequent to the Closing
Date.
8.5 NOTICE TO THE BUYER
If any of the matters as to which the Buyer's Indemnitees are
entitled to receive indemnification under Section 8.4 should
entail litigation with or claims asserted by parties other
than the Buyer, the Buyer shall be given prompt notice thereof
and shall have the right, at its expense, to control such
claim or litigation upon prompt notice to the Seller of its
election to do so. To the extent requested by the Buyer, the
Seller, at his expense, shall cooperate with and assist the
Buyer, in connection with such claim or litigation. The Seller
shall have the right to appoint single counsel to consult with
and remain advised by the Buyer in connection with such claim
or litigation. The Buyer shall have final authority to
determine all matters in connection with such claim or
litigation; provided, however, that the Buyer shall not settle
any third party claim without the consent of the Seller, which
shall not be unreasonably denied or delayed.
8.6 SURVIVAL OF INDEMNIFICATION
The obligations to indemnify and hold harmless pursuant to
this Section 8 shall survive the Closing of the purchase of
the Business contemplated hereby for a period of 2 1/2 years,
notwithstanding any investigation at any time made by or on
behalf of any party, except that:
8.6.1 claims, if any, asserted in writing prior to the end
of such 2 1/2 year period identified as a claim for
indemnification pursuant to this Section 8 shall
survive until finally resolved and satisfied in full;
and
- 34 -
<PAGE>
8.6.2 tax or environmental claims arising from a breach of
Sections 2.22 and 2.24, respectively, shall survive
for the full period of the applicable statute of
limitations, and until finally resolved and satisfied
in full if asserted on or prior to the expiration of
any such period.
8.7 OFFSET
The Seller acknowledges and agrees that the Buyer shall be
entitled to offset any indemnity claim under Section 8.2
against any payment due to the Seller under Section 1.2 hereof
at the Buyer's sole option. In the event that the Buyer
intends to assert a right to offset under this Section 8
Agreement shall, prior to offsetting any amount otherwise due
(or as soon thereafter as is reasonably practicable), give
written notice to the other party of the basis upon which it
asserts such right and the manner in which the amount offset
was calculated. The parties agree that the failure of the
party giving such notice to state any claim or amount in any
such notice shall not constitute a waiver of such claim or
amount or in any manner or to any extent compromise or
prejudice any claim not stated therein.
9. MISCELLANEOUS
9.1 KNOWLEDGE OF SELLER
Where any representation or warranty contained in this
Agreement is expressly qualified by reference to the best
knowledge of the Seller, the Seller confirms that it has made
due and diligent inquiry of its President/CEO as to the
matters that are the subject of such representation and
warranty.
9.2 "PERSON" DEFINED
"Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization and a government or other department or agency
thereof.
9.3 NOTICES
All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other
address as a party may designate by notice hereunder, and
shall be either delivered by hand, sent by recognized
overnight courier, made by telecopy or facsimile transmission,
or sent by registered or certified mail, return receipt
requested, postage prepaid.
- 35 -
<PAGE>
If to the Buyer:
Star Mountain, Inc.
3601 Eisenhower Avenue
Alexandria, Virginia 22304-6439
Attn: Carl von Sternberg, President
Fax No: (703) 960-7009
With a copy to:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Attn: David C. Haas, Esq.
Fax No: (202) 857-6395
If to the Seller:
Essex Corporation
9150 Guilford Road
Columbia, Maryland 21046-1891
Attn: Harry Letaw, Jr.
Fax No: (301) 953-7880
With a copy to:
De Martino, Finkelstein, Rosen & Virga 1818 N Street, N.W.
Suite 400
Washington, DC 20036
Attn: Ralph V. De Martino, Esq.
Fax No: (202) 659-1290
All notices, requests, consents and other communications
hereunder shall be deemed to have been given if by hand, at
the time of the delivery thereof to the receiving party at the
address of such party set forth above:
9.3.1 if sent by overnight courier, on the next business
day following the day such notice is delivered to the
courier service;
9.3.2 if made by telecopy or facsimile transmission, at the
time that receipt thereof has been acknowledged by
electronic confirmation or otherwise; or
- 36 -
<PAGE>
9.3.3 if sent by registered or certified mail, on the fifth
business day following the day such mailing is sent.
The address of any party herein may be changed at any
time by written notice to the parties.
9.4 ENTIRE AGREEMENT
This Agreement and the other Documents embody the entire
agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior
oral or written agreements and understandings relating to the
subject matter hereof, including but not limited to the letter
of intent between Buyer and Seller dated 25 June, 1997 (signed
by Seller on 8 July, 1997). No statement, representation,
warranty, covenant, or agreement of any kind not expressly set
forth in the other Documents shall affect, or be used to
interpret, change, or restrict, the express terms and
provisions of this Agreement.
9.5 MODIFICATIONS AND AMENDMENTS
The terms and provisions of this Agreement may be modified or
amended only by written agreement executed by all parties
hereto.
9.6 ASSIGNMENT/BINDING EFFECT
Neither this Agreement, nor any right hereunder, may be
assigned by any of the parties hereto without the prior
written consent of the other parties; PROVIDED, however, that
Buyer may assign its rights to acquire the Transferred Assets,
and its obligations to assume the assumed liabilities, to any
subsidiary and the Seller may assign any amount due it under
this Agreement or any of the other Documents. This Agreement
shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, personal
representatives, successors, and permitted assigns.
9.7 PARTIES IN INTEREST
Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
Nothing in this Agreement shall be construed to create any
rights or obligations except among the parties hereto, and no
person or entity shall be regarded as a third-party
beneficiary of this Agreement.
9.8 GOVERNING LAW
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed
by the internal laws of the Commonwealth of Virginia without
giving effect to the conflict of law principles
- 37 -
<PAGE>
thereof.
9.9 ARBITRATION
Any dispute or difference between the parties hereto arising
out of or relating to this Agreement shall be finally settled
by arbitration in accordance with the Commercial Rules of the
American Arbitration Association by a panel of three qualified
arbitrators. The Seller and the Buyer shall each choose an
arbitrator and the third shall be chosen by the two so chosen.
If either the Seller or the Buyer fails to choose an
arbitrator within 30 days after notice of commencement of
arbitration or if the two arbitrators fail to choose a third
arbitrator within 30 days after their appointment, the
American Arbitration Association shall, upon the request of
any party to the dispute or difference, appoint the arbitrator
or arbitrators to constitute or complete the panel as the case
may be. Arbitration proceedings hereunder may be initiated by
either the Seller or the Buyer making a written request to the
American Arbitration Association, together with any
appropriate filing fee, at the office of the American
Arbitration Association in Washington, D.C. All arbitration
proceedings shall be held in Washington, D.C. Any order or
determination of the arbitral tribunal shall be final and
binding upon the parties to the arbitration and may be entered
in any court having jurisdiction.
9.10 SEVERABILITY
In the event that any arbitral tribunal of competent
jurisdiction shall finally determine that any provision, or
any portion thereof, contained in this Agreement shall be void
or unenforceable in any respect, then such provision shall be
deemed limited to the extent that such arbitral tribunal
determines it enforceable, and as so limited shall remain in
full force and effect. In the event that such arbitral
tribunal shall determine any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and
effect.
9.11 INTERPRETATION
The parties hereto acknowledge and agree that: (i) the rule of
construction to the effect that any ambiguities are resolved
against the drafting party shall not be employed in the
interpretation of this Agreement, and (ii) the terms and
provisions of this Agreement shall be construed fairly as to
all parties hereto and not in favor of or against any party,
regardless of which party was generally responsible for the
preparation of this Agreement.
- 38 -
<PAGE>
9.12 HEADINGS AND CAPTIONS
The headings and captions of the various subdivisions of this
Agreement are for convenience of reference only and shall in
no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms
or provisions hereof.
9.13 RELIANCE
The parties hereto agree that, notwithstanding any right of
any party to this Agreement to investigate the affairs of any
other party to this Agreement, the party having such right to
investigate shall have the right to rely fully upon the
representations and warranties of the other party expressly
contained herein.
9.14 EXPENSES
Each party shall pay its own fees and expenses (including the
fees of any attorneys, accountants, appraisers or others
engaged by such party) incurred in connection with this
Agreement and the transactions contemplated hereby whether or
not the transactions contemplated hereby are consummated.
9.15 GENDER
All pronouns and any variation thereof shall be deemed to
refer to the masculine, feminine, neuter, singular, or plural
as the identity of the person or entity or the context may
require.
9.16 PUBLICITY
Except by the mutual agreement between the Seller and the
Buyer, no party shall issue any press release or otherwise
make any public statement with respect to the execution of, or
the transactions contemplated by, this Agreement except as may
be required by law.
9.17 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
and by different parties hereto on separate counterparts, each
of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
- 39 -
<PAGE>
IN WITNESS WHEREOF, the Buyer and the Seller have each caused this
Agreement to be executed by its duly authorized officer all as of the day and
year first above written.
STAR MOUNTAIN, INC. ATTEST
\Timothy Schimkus\ \Irene M. Byrne\
- ----------------------------- -----------------------------
Timothy Schimkus Irene M. Byrne
Treasurer Secretary
ESSEX CORPORATION ATTEST
\Harry Letaw, Jr.\ \Kimberly DeChello\
- ----------------------------- -----------------------------
Harry Letaw, Jr. Kimberly DeChello
Chief Executive Officer Assistant Secretary
- 40 -
<PAGE>
EXHIBIT A
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that ESSEX CORPORATION, a Virginia
corporation (the "Transferor"), in consideration of the covenants, agreements,
terms, and provisions contained in the Asset Purchase Agreement dated 16
October, 1997 and effective 1 October, 1997 (the "Asset Purchase Agreement") by
and between Transferor and STAR MOUNTAIN, INC., a Virginia corporation (the
"Transferee"), and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, does hereby grant, sell, assign,
convey, transfer, and deliver "where is" unto Transferee, free and clear of all
claims, charges, liens, contracts (except as otherwise provided in the Asset
Purchase Agreement), rights, options, security interests, mortgages,
encumbrances, and restrictions whatsoever, the Transferred Assets.
TO HAVE AND TO HOLD all and singular said Transferred Assets unto
Transferee, its successors, and assigns, to its own use and benefit forever.
This Bill of Sale is subject in all respects to the terms of the Asset
Purchase Agreement, and all of the representations, warranties, covenants, and
agreements contained in the Asset Purchase Agreement, all of which shall survive
the execution and delivery of this Bill of Sale in accordance with the terms of
the Asset Purchase Agreement. Transferor represents, warrants, and covenants
with Transferee that it is the true and lawful owner of the Transferred Assets
and has a good and perfect right to sell and transfer good and marketable title
thereto, free and clear of all Claims. All capitalized words and terms used in
this Bill of Sale and not defined herein shall have the respective meanings
ascribed to them in the Asset Purchase Agreement.
This Bill of Sale and the rights and obligations of the Transferee and
Transferor hereunder shall be construed in accordance with and governed by the
internal laws of the Commonwealth of Virginia, without giving effect to the
conflict of law principles thereof.
- 1 -
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Bill of Sale to be
executed by its duly authorized officer, as of the 16th day of October, 1997.
ESSEX CORPORATION ATTEST:
By: \Harry Letaw, Jr.\ By: \Kimberly DeChello\
------------------------------- -------------------------------
Harry Letaw, Jr. Kimberly DeChello
Chief Executive Officer Assistant Secretary
- 2 -
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is made and
entered into as of the 16th day of October, 1997 by and between STAR MOUNTAIN,
INC. (the "Assignee"), a Virginia corporation, and ESSEX CORPORATION (the
"Assignor"), a Virginia corporation.
PRELIMINARY STATEMENTS:
Assignor and Assignee have entered into an Asset Purchase Agreement
dated 16 October, 1997 herewith (the "Asset Purchase Agreement"), pursuant to
which Assignor has agreed to transfer to Assignee, substantially all of its
assets used in connection with its "Systems Effectiveness Division" as more
particularly described in the Asset Purchase Agreement (collectively, the
"Business"); and
In connection with the Business, Assignor is a party to certain written
agreements and holds certain licenses and permits and, in order to induce
Assignee to enter into the Asset Purchase Agreement, Assignor desires to assign
to Assignee all right, title, and interest it has in and to the agreements,
licenses, and permits and Assignee desires to accept such assignment and to
assume and become responsible on and after the date hereof for performing and
observing the terms, conditions, and provisions of the agreements, licenses, and
permits and would not enter into the Asset Purchase Agreement or consummate the
transactions contemplated thereby but for this Agreement; and
The provisions in this Agreement will protect the Business and goodwill
of the Business transferred to Assignee pursuant to the Asset Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises set forth above and
the mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. ASSIGNMENT OF CONTRACTS
Assignor hereby sells, assigns, and transfers to Assignee, its
successors, and assigns, all right, title, and interest of Assignor in
the agreements and contracts set forth on SCHEDULE 1 attached hereto
and incorporated herein by reference (the "Contracts"). Specifically
excluded from this Agreement are all contracts which are not capable of
being transferred or assigned without the approval or consent of any
party thereto other than Assignor which approval or consent has not as
of this date been obtained, all such contracts and agreements being
listed in SCHEDULE 2 hereto.
- 1 -
<PAGE>
2. ASSIGNMENT OF LICENSES, ETC.
Assignor hereby sells, assigns, and transfers to Assignee, its
successors, and assigns, all right, title, and interest of Assignor in
the licenses and permits set forth on SCHEDULE 3 attached hereto and
incorporated herein by reference (the "Licenses").
3. ASSUMPTION
Assignee accepts the foregoing assignments and on and after the date
hereof will perform all obligations required to be performed by and in
the manner set forth in the Contracts and Licenses, all with the same
force and effect as if Assignee were originally named as a party
therein.
4. NO OTHER ASSUMPTION
Except for the obligations expressly assumed pursuant to Section 3
above, Assignee shall not be responsible for, does not assume, and
shall not perform any obligations or liabilities of Assignor, whether
known or unknown, contingent or otherwise, arising from Assignor's
conduct in connection with the Contracts or the Licenses, whether
before or after the date hereof.
5. MISCELLANEOUS
5.1 APPLICABLE LAW
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed
by the internal laws of the Commonwealth of Virginia, without
giving effect to the conflict of law principles thereof.
5.2 HEADINGS
Section and other headings contained in this Agreement are for
reference purposes only and are in no way intended to define,
interpret, describe or otherwise limit the scope, extent or
intent of this Agreement or any of its provisions.
5.3 PARTIES IN INTEREST
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns.
- 2 -
<PAGE>
5.4 AMENDMENTS
This Agreement may not be changed orally but only by an
agreement in writing signed by the parties hereto.
5.5 THIRD PARTY BENEFICIARIES
Each party hereto intends that this Agreement shall not
benefit or create any right or cause of action in or on behalf
of any person other than the parties hereto, their successors,
and assigns.
(End)
- 3 -
<PAGE>
IN WITNESS WHEREOF, Assignee and Assignor have caused this Agreement to
be executed as of the date first above written.
STAR MOUNTAIN, INC. ATTEST
ASSIGNEE
\Timothy Schimkus\ \Irene M. Byrne\
By: _____________________________ By: ____________________________
Timothy Schimkus Irene M. Byrne
Treasurer Secretary
ESSEX CORPORATION ATTEST
ASSIGNOR
\Harry Letaw, Jr.\ \Kimberly DeChello\
By: _____________________________ By: ____________________________
Harry Letaw, Jr. Kimberly DeChello
Chief Executive Officer Assistant Secretary
- 4 -
<PAGE>
GNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
SCHEDULE 1
ASSUMED LIABILITIES
1. CONTRACTS
1.1 Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by
the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
1.2 Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by
USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower
Avenue (AMSEL-AC-WB- B), Alexandria, Virginia 22331-0700, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
1.3 Subcontract No.116054-24195, dated February 11, 1997, issued
by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division,
1430 Springhill Road, Suite 510, McLean, Virginia 22102
(attached) -- including Delivery Order DAAB07-96-D-H753.
1.4 Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101
NASA Road 1, Houston, Texas 77058-3698, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
1.5 Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations
Office, P.O. Box 5400, Albuquerque, New Mexico 87185-5400, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
1.6 Grant No. 1 R43 AA11608-01 dated September 22, 1997 issued by
National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock
Road, Suite 227, Orlando, FL 32803.
1.7 Grant No. 1 R43 AG14316-01 dated September 30, 1997 issued by
National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock
Road, Suite 227, Orlando, FL 32803.
- 1 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
1.8 Contract No. USZA92-97-C-0055 dated September 16, 1997 issued
by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, VA 22102.
1.9 Contract No. N39998-97-M-5542 dated September 10, 1997 issued
by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation,1430 Springhill Road, Suite 510, McLean, VA 22102.
1.10 Agreement for Consulting Services, dated June 7, 1993, between
Edward H. Frederick, Jr., and Essex Corporation.
1.11 Agreement for Consulting Services, dated March 11, 1997,
between Stephen A. Povah and Essex Corporation.
1.12 Subcontract No. 2418A, dated December 16, 1996, between the
University of Central Florida and Essex Corporation.
1.13 Subcontract No. 2420-01, dated March 21, 1997, between James
Madison University and Essex Corporation.
1.14 Subcontract No. 2418B, dated December 16, 1996, between Jones
and Jones Research Associates and Essex Corporation.
2. FACILITY LEASES
2.1 Lease, dated October 1, 1986, between Freida V. Bruer and
Essex Corporation, a Virginia corporation, for one 14' x 70'
mobile office unit.
2.2 Lease, dated December 8, 1994, between TDP Corporation, a
Virginia corporation, and Essex Corporation, a Virginia
corporation, for the premises identified as Suite 510 of the
building located at 1430 Springhill Road, McLean Virginia,
commonly known as Tysons Dulles Plaza II.
2.3 Lease, dated April 1, 1997, between Koger Equity, Inc., a
Florida corporation, and Essex Corporation, a Virginia
corporation, for the premises identified as Suite 227 of the
building located at 1040 Woodcock Road, Orlando Florida,
commonly known as Palmetto.
- 2 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
3. CAPITAL EQUIPMENT LEASES
3.1 Equipment Lease Agreement No. 493167, dated October 12, 1995,
between AT&T Capital Leasing Services and Essex Corporation.*
3.2 Lease No. 118147001, dated October 10, 1995, between Potomac
Funding & Leasing Association and Essex Corporation.*
3.3 Equipment Lease dated October 26, 1995, between Copelco
Capital, Inc., P.O. Box 728, Park Ridge, NJ 07656-0728 and
Essex Corporation (Minolta copier rental).
3.4 Equipment Lease dated December 12, 1996, between AT&T Credit
Corp., P.O. Box 849, Parsippany, NJ 07054 and Essex
Corporation (telephone system lease).
3.5 Equipment Lease between Minolta Leasing Services (Chemical
Leasing), P.O. Box 105819, Atlanta, GA 30348-5819 and Essex
Corporation (Orlando copier lease).
3.6 Equipment Lease dated December 9, 1996, between Nissan Motor
Acceptance Corp., P.O. Box 105810, Atlanta, GA 30348-5810 and
Essex Corporation (truck lease).
3.7 Equipment Lease between Pitney Bowes, 8875 Dex Ellis Trail,
#501, Jacksonville, FL 32256-1221 and Essex Corporation
(postage meter rental, model 0015743, serial no. 0001632762).
* The parties acknowledge that those certain capital equipment leases
numbered 3.1 and 3.2 are in the process of being assigned and that the
Seller, with the cooperation of the Buyer, will use its best efforts to
effect such assignment as soon as possible (the Buyer being entitled to
the use of the subject equipment until and after the effective date of
such assignments).
4. ACCRUED VACATION, LEASE MAINTENANCE AGREEMENTS AND ACCOUNTS PAYABLE
4.1 Accrued Vacation
Accrued vacation not to exceed $66,825.
4.2 Accounts payable which relate directly to the Business in a
total amount not to exceed $152,170.
- 3 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
4.3 Additional Materials and Miscellaneous Overhead/Indirect Items
4.3.1 All of the items listed in the Sections 4.3.2 and
4.3.3 are to be assumed by the Buyer only to the
extent same were properly incurred with reference
to, and are recoverable by the Buyer under, one of
the contracts listed in Section 1 to this Schedule
1.3, the assumption by the Buyer to be effective
only when and if the contract with respect to which
the amount is so incurred (and under which it is so
recoverable) has been novated or fully
subcontracted in the name of the Buyer in
accordance with Section 1.1.4 of this Agreement.
4.3.2 Additional materials (direct costs), in an amount
not to exceed $150,000, and travel (direct costs),
in an amount not to exceed $25,000, to the extent
any of the foregoing were properly incurred by the
Seller pursuant to one or more of the government
contracts being assigned/novated to the Buyer under
this Asset Purchase Agreement.
4.3.3 Miscellaneous overhead/indirect items for which no
invoice(s) have been received will be allocated to
each of the Seller and Buyer on a pro rata basis
according to which party benefitted; provided,
however, that in no event shall Seller's liability
exceed $25,000 for the foregoing miscellaneous
overhead/indirect expenses, to the extent any of
the foregoing were properly incurred by the Seller
pursuant to one or more of the government contracts
being assigned/novated to the Buyer under this
Asset Purchase Agreement.
5. LEASE MAINTENANCE AGREEMENTS
5.1 Maintenance Agreement dated March 31, 1997, between Avid
Technology, Inc., P.O. Box 3197, Boston, MA 02241-3197 and
Essex Corporation (video lab maintenance).
5.2 Maintenance Agreement dated October 26, 1995, between Gold
Office Products, 14620 Rothgeb Drive, Rockville, MD 20850 and
Essex Corporation (Minolta copier maintenance agreement).
5.3 Maintenance Agreement dated December 12, 1996, between AT&T,
5450 N.W. 33rd Avenue, Suite 106, Ft. Lauderdale, FL 33309 and
Essex Corporation (post warranty maintenance).
- 4 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
5.4 Maintenance Agreement 5320-3128468, dated January 14, 1997,
between Copytronics, Inc., P.O. Box 5489, Jacksonville, FL
32247 and Essex Corporation (Minolta copier 5320, serial no.
3128468, maintenance and extra copier).
- 5 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
SCHEDULE 2
CONSENTS
6. [reserved]
7. Novation of Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued
by the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, Virginia 22102.
8. Novation of Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued
by USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower Avenue
(AMSEL-AC-WBB), Alexandria, Virginia 22331-0700, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
9. Novation of Subcontract No. 116054-24195, dated February 11, 1997,
issued by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division, 1430
Springhill Road, Suite 510, McLean, Virginia 22102 including Delivery
Order DAAB07-96-D-H753.
10. Novation of Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101 NASA Road
1, Houston, Texas 77058- 3698, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
11. Novation of Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations Office, P.O.
Box 5400, Albuquerque, New Mexico 87185-5400, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
12. Novation of Contract-Grant No.1 R43 AA11608-01 dated September 22, 1997
issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock Road,
Suite 227, Orlando, FL 32803.
13. Novation of Contract No. USZA92-97-C-0055 dated September 16, 1997
issued by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite 510,
McLean, VA 22102.
- 1 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
14. Novation of Contract No. N39998-97-M-5542 dated September 10, 1997
issued by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation, 1430 Springhill Road, Suite 510, McLean, VA 22102.
15. Novation of Contract - Grant No. 1 R43 AG14316-01 dated September 30,
1997 issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock Road,
Suite 227, Orlando, FL 32803.
16. Assignment of Lease dated December 8, 1994, between TDP Corporation, a
Virginia corporation, and Essex Corporation, a Virginia corporation,
for the premises identified as Suite 510 of the building located at
1430 Springhill Road, McLean Virginia, commonly known as Tysons Dulles
Plaza II.
- 2 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
SCHEDULE 3
INTELLECTUAL PROPERTIES
1. LIST:
1.1 Delta
1.2 CDL/Passing Gear
1.3 Information from SED SBIR's to extent not restricted by U. S.
Government prior rights. Per following table:
ESSEX SHORT TITLE/DATE/AGENCY PRODUCT COMMENTS
JOB NO.
2418 VE Assess Test Battery Software Project on-going
12/96-12/98 (NASA)
2381 Indexing - Posture Software Technique for converting video
10/94-10/96 (NSF) data
2366 A Smart System (PAT) Software Technique for converting videoa
2/94-2/96 (NASA) data
2365 Performance Readiness Software A series of visual & cognitive
2/94-2/96 (NASA) tests were computerized
2353 Temporal Factors Software - Visual tests were computerized
6/93-6/95 (NSF) Temporal
Factors
Battery
2350 Isoperformance Software Programs written to analyze
8/93-8/95 (Brooks AFB) manpower data
2342 Record/Eval Sim Sick Software Technique for converting video
Device - 4/93-4/95 data
(NAVAIR)
2339 Workload Device Hardware & Eye movement scoring algorithms
4/93-4/95 (NAWC) Software developed
2326 Dose Equivalency Software for DELTA
9/92-9/94 (NSF)
2320 Dark Focus Hardware - Hand held device developed for
9/92-9/94 (NASA) Dark Focus visual test
Device
- 1 -
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
16 OCTOBER, 1997
2. EXCEPTIONS:
2.1 Letters from various legal counsel regarding US Patent No.
5,103,408.
- 2 -
<PAGE>
EXHIBIT C (1)
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT OF LEASE (this "Assignment") is made and entered into
as of the 16th day of October, 1997, by and among FREIDA V. BRUER (the
"Landlord"), whose address is P.O. Box 520, Daleville, AL 36322, ESSEX
CORPORATION, a Virginia Corporation (the "Assignor"), whose address 9150
Guilford Road, Columbia, Maryland 21046-1891, and STAR MOUNTAIN, INC., a
Virginia corporation, whose address is 3601 Eisenhower Avenue, Alexandria,
Virginia 22304-6439.
PRELIMINARY STATEMENTS:
On 1 October, 1986, Landlord, as landlord, and ESSEX CORPORATION
("Essex"), as tenant, entered into a Lease (the "Lease") for one 14' x 70'
mobile office unit (the "Premises").
The Lease provides, among other things, that said Lease shall not be
assigned without Landlord's prior written consent.
Assignor desires to assign its interest in the Lease and Assignee
desires to assume Assignor's interest in the Lease.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. ASSIGNMENT
Assignor assigns to Assignee, as of the date of this Assignment, all of
Assignor's right, title, and interest in and to the Lease. Assignor
covenants (a) that neither Assignor nor Landlord is in default under
the Lease and no notice of default has been sent by either Assignor or
Landlord to the other party, (b) that the Lease is not encumbered by
any prior transfer, assignment, mortgage, or any encumbrance, placed or
caused by Assignor (c) that Assignor has full and lawful authority to
assign the Lease, (d) that the Lease attached hereto as EXHIBIT A
constitutes the entire agreement between Assignor and Landlord with
respect to the leasing of the Premises described in the Lease and the
Lease is in full force and effect and has not been modified,
supplemented, or amended in any way, and (e) that the rent required to
be paid by Assignor for all periods through the date hereof, has been
paid in full.
C(1) - 1
<PAGE>
2. CONSENT TO ASSIGNMENT
Landlord consents to the assignment by Assignor to Assignee. Landlord
does not hereby consent to further assignment or to any subletting of
the Premises. Landlord certifies that (a) neither Assignor nor Landlord
is in default under the Lease and no notice of default has been sent by
either Assignor or Landlord to the other party, (b) the Lease
constitutes the entire agreement between Assignor and Landlord with
respect to the leasing of the Premises described in the Lease and the
Lease is in full force and effect and has not been modified,
supplemented, or amended in any way, (c) the rent required to be paid
by Assignor for all periods through the date hereof has been paid in
full, and (d) the Lease is not encumbered by any prior transfer,
assignment, mortgage, or any encumbrance. Further, Landlord
acknowledges that no existing or future default by Assignor shall be
deemed a default by Assignee with respect to any such defaults by
Assignor.
3. RELEASE
Landlord releases and discharges Assignor from any and all claims,
demands, actions, and causes of action of every conceivable kind and
nature whatsoever accruing on or after the date hereof which Landlord
might assert, whether absolute, contingent, known, or unknown, against
Assignor by reason of, arising out of, or pertaining to, any matter,
act, transaction, occurrence, omission, or commission relating in any
manner to the Lease. Assignor releases and discharges Landlord from any
and all claims, demands, actions, and causes of action of every
conceivable kind and nature whatsoever, accruing on or after the date
hereof which Assignor might assert, whether absolute, contingent,
known, or unknown against Landlord by reason of, arising out of, or
pertaining to, any matter, act, transaction, occurrence, omission, or
commission relating in any manner to the Lease.
4. NO MODIFICATION
This Assignment may not be changed, modified, discharged, or terminated
unless in writing signed by the parties hereto or their respective
successors and assigns. This Assignment shall be binding upon the
parties and their successors and assigns.
5. COUNTERPARTS
This Assignment may be signed by each party hereto upon a separate
copy, in which event all of said copies shall constitute a single
counterpart to this Assignment. This Assignment may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one and the
same instrument.
C(1) - 2
<PAGE>
6. ASSUMPTION
The Assignee hereby assumes all of the obligations of the Assignor
under the Assignment.
(End)
C(1) - 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first written above.
LANDLORD: FREIDA V. BRUER
\Freida V. Bruer\
By: ____________________________
Freida V. Bruer
ASSIGNOR: ESSEX CORPORATION
\Harry Letaw, Jr.\
By: ____________________________
Harry Letaw, Jr.
Chief Executive Officer
ASSIGNEE: STAR MOUNTAIN, INC.
\Timothy Schimkus\
By: ____________________________
Timothy Schimkus
Treasurer
<PAGE>
EXHIBIT C(2)
FORM OF
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT OF LEASE (this "Assignment") is made and entered into
as of the ___ day of ___________, 1997, by and among TDP CORPORATION, a Virginia
corporation (the "Landlord"), whose address is c/o BARNES, MORRIS, PARDOE &
FOSTER MANAGEMENT SERVICES LLC, 1420 Springhill Road, Suite 203, McLean, VA
22102, ESSEX CORPORATION, a Virginia Corporation (the "Assignor"), whose address
9150 Guilford Road, Columbia, Maryland 21046-1891, and STAR MOUNTAIN, INC., a
Virginia corporation, whose address is 3601 Eisenhower Avenue, Alexandria,
Virginia 22304-6439.
PRELIMINARY STATEMENTS:
On 8 December, 1994, Landlord, as landlord, and ESSEX CORPORATION
("Essex"), as tenant, entered into a Lease (the "Lease") for the premises
identified as Suite 510 of the building located 1430 Springhill Road, McLean,
Virginia, commonly known as Tysons Dulles Plaza II (the "Premises").
The Lease provides, among other things, that said Lease shall not be
assigned without Landlord's prior written consent.
Assignor desires to assign its interest in the Lease and Assignee
desires to assume Assignor's interest in the Lease.
Assignor has requested that Landlord release Assignor from its
obligations under the Lease and has offered in exchange to release Landlord from
claims that Assignor may have against Landlord.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. ASSIGNMENT
Assignor assigns to Assignee, as of the date of this Assignment, all of
Assignor's right, title, and interest in and to the Lease. Assignor
covenants (a) that neither Assignor nor Landlord is in default under
the Lease and no notice of default has been sent by either Assignor or
Landlord to the other party, (b) that the Lease is not encumbered by
any prior transfer, assignment, mortgage, or any encumbrance placed or
caused by Assignor, (c) that Assignor
C(2) - 1
<PAGE>
has full and lawful authority to assign the Lease, (d) that the Lease
attached hereto as EXHIBIT A constitutes the entire agreement between
Assignor and Landlord with respect to the leasing of the Premises
described in the Lease and the Lease is in full force and effect and
has not been modified, supplemented, or amended in any way, and (e)
that the rent required to be paid by Assignor for all periods through
the date hereof, has been paid in full.
2. CONSENT TO ASSIGNMENT
Landlord consents to the assignment by Assignor to Assignee. Landlord
does not hereby consent to further assignment or to any subletting of
the Premises. Landlord certifies that (a) neither Assignor nor Landlord
is in default under the Lease and no notice of default has been sent by
either Assignor or Landlord to the other party, (b) the Lease
constitutes the entire agreement between Assignor and Landlord with
respect to the leasing of the Premises described in the Lease and the
Lease is in full force and effect and has not been modified,
supplemented, or amended in any way, (c) the rent required to be paid
by Assignor for all periods through the date hereof has been paid in
full, and (d) the Lease is not encumbered by any prior transfer,
assignment, mortgage, or any encumbrance. Further, Landlord
acknowledges that no existing or future default by Assignor shall be
deemed a default by Assignee with respect to any such defaults by
Assignor.
3. RELEASE
Landlord releases and discharges Assignor from any and all claims,
demands, actions, and causes of action of every conceivable kind and
nature whatsoever accruing on or after the date hereof which Landlord
might assert, whether absolute, contingent, known, or unknown, against
Assignor by reason of, arising out of, or pertaining to, any matter,
act, transaction, occurrence, omission, or commission relating in any
manner to the Lease. Assignor releases and discharges Landlord from any
and all claims, demands, actions, and causes of action of every
conceivable kind and nature whatsoever, accruing on or after the date
hereof which Assignor might assert, whether absolute, contingent,
known, or unknown against Landlord by reason of, arising out of, or
pertaining to, any matter, act, transaction, occurrence, omission, or
commission relating in any manner to the Lease.
4. NO MODIFICATION
This Assignment may not be changed, modified, discharged, or terminated
unless in writing signed by the parties hereto or their respective
successors and assigns. This Assignment shall be binding upon the
parties and their successors and assigns.
C(2) - 2
<PAGE>
5. COUNTERPARTS
This Assignment may be signed by each party hereto upon a separate
copy, in which event all of said copies shall constitute a single
counterpart to this Assignment. This Assignment may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one and the
same instrument.
6. ASSUMPTION
The Assignee hereby assumes all of the obligations of the Assignor
under the Assignment.
C(2) - 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first written above.
LANDLORD: ATTEST
TDP CORPORATION
By: ______________________________ By: ____________________________
President Secretary
ASSIGNOR: ATTEST
ESSEX CORPORATION
By: ____________________________ By: ____________________________
Harry Letaw, Jr. Kimberly DeChello
Chief Executive Officer Assistant Secretary
ASSIGNEE: ATTEST
STAR MOUNTAIN, INC.
By: ____________________________ By: ____________________________
Timothy Schimkus Irene M. Byrne
Treasurer Secretary
<PAGE>
EXHIBIT C(3)
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT OF LEASE (this "Assignment") is made and entered into
as of the 16th day of October, 1997, by and among KOGER EQUITY, INC., a Florida
corporation (the "Landlord"), whose address is 3986 Boulevard Center Drive,
Jacksonville, FL 32207, ESSEX CORPORATION, a Virginia Corporation (the
"Assignor"), whose address 9150 Guilford Road, Columbia, Maryland 21046-1891,
and STAR MOUNTAIN, INC., a Virginia corporation, whose address is 3601
Eisenhower Avenue, Alexandria, Virginia 22304-6439.
PRELIMINARY STATEMENTS:
On 1 April, 1997, Landlord, as landlord, and ESSEX CORPORATION
("Essex"), as tenant, entered into a Lease (the "Lease") for the premises
identified as Suite 227 of the building located 1040 Woodcock Road, Orlando,
Florida, commonly known as Palmetto (the "Premises").
The Lease provides, among other things, that said Lease shall not be
assigned without Landlord's prior written consent.
Assignor desires to assign its interest in the Lease and Assignee
desires to assume Assignor's interest in the Lease.
Assignor has requested that Landlord release Assignor from its
obligations under the Lease and has offered in exchange to release Landlord from
claims that Assignor may have against Landlord.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. ASSIGNMENT
Assignor assigns to Assignee, as of the date of this Assignment, all of
Assignor's right, title, and interest in and to the Lease. Assignor
covenants (a) that neither Assignor nor Landlord is in default under
the Lease and no notice of default has been sent by either Assignor or
Landlord to the other party, (b) that the Lease is not encumbered by
any prior transfer, assignment, mortgage, or any encumbrance placed or
caused by the Assignor, (c) that Assignor has full and lawful authority
to assign the Lease, (d) that the Lease attached hereto as EXHIBIT A
constitutes the entire agreement between Assignor and Landlord with
respect to the leasing of the Premises described in the Lease and the
Lease is in full force and effect and has not been modified,
supplemented, or amended in any way, and (e) that the rent required to
be paid by Assignor for all periods through the date hereof, has been
paid in full.
C(3) - 1
<PAGE>
2. CONSENT TO ASSIGNMENT
Landlord consents to the assignment by Assignor to Assignee. Landlord
does not hereby consent to further assignment or to any subletting of
the Premises. Landlord certifies that (a) neither Assignor nor Landlord
is in default under the Lease and no notice of default has been sent by
either Assignor or Landlord to the other party, (b) the Lease
constitutes the entire agreement between Assignor and Landlord with
respect to the leasing of the Premises described in the Lease and the
Lease is in full force and effect and has not been modified,
supplemented, or amended in any way, (c) the rent required to be paid
by Assignor for all periods through the date hereof has been paid in
full, and (d) the Lease is not encumbered by any prior transfer,
assignment, mortgage, or any encumbrance. Further, Landlord
acknowledges that no existing or future default by Assignor shall be
deemed a default by Assignee with respect to any such defaults by
Assignor.
3. RELEASE
Landlord releases and discharges Assignor from any and all claims,
demands, actions, and causes of action of every conceivable kind and
nature whatsoever accruing on or after the date hereof which Landlord
might assert, whether absolute, contingent, known, or unknown, against
Assignor by reason of, arising out of, or pertaining to, any matter,
act, transaction, occurrence, omission, or commission relating in any
manner to the Lease. Assignor releases and discharges Landlord from any
and all claims, demands, actions, and causes of action of every
conceivable kind and nature whatsoever, accruing on or after the date
hereof which Assignor might assert, whether absolute, contingent,
known, or unknown against Landlord by reason of, arising out of, or
pertaining to, any matter, act, transaction, occurrence, omission, or
commission relating in any manner to the Lease.
4. NO MODIFICATION
This Assignment may not be changed, modified, discharged, or terminated
unless in writing signed by the parties hereto or their respective
successors and assigns. This Assignment shall be binding upon the
parties and their successors and assigns.
5. COUNTERPARTS
This Assignment may be signed by each party hereto upon a separate
copy, in which event all of said copies shall constitute a single
counterpart to this Assignment. This Assignment may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one and the
same instrument.
6. ASSUMPTION
The Assignee hereby assumes all of the obligations of the Assignor
under the Assignment.
C(3) - 2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first written above.
LANDLORD: KOGER EQUITY, INC.
\J. Velma Keen, II\
By: ____________________________
J. Velma Keen, II
Vice President
ASSIGNOR: ESSEX CORPORATION
\Harry Letaw, Jr.\
By: ____________________________
Harry Letaw, Jr.
Chief Executive Officer
ASSIGNEE: STAR MOUNTAIN, INC.
\Timothy Schimkus\
By: ____________________________
Timothy Schimkus
Treasurer
<PAGE>
EXHIBIT D
$325,000 1 October, 1997
SUBORDINATED
NON-NEGOTIABLE PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned Star Mountain, Inc. (the "Maker"),
promises to pay to the order of Essex Corporation (the "Holder"), the principal
sum of Three Hundred Twenty- five Thousand and 00/100 Dollars ($325,000),
together with interest on the unpaid balance thereof, computed on the basis of a
three hundred and sixty (360) day year, payable in full on 1st January, 1999 as
set forth herein. This promissory note shall be referred to herein as this
"Note".
1. PRINCIPAL AND INTEREST
The principal amount of this Note shall be payable in fifteen (15)
equal monthly installments of principal and interest (at the rate of
nine percent 9% per annum) in the amount of $22,989.00. The
aforementioned payments of principal and accrued interest shall
commence on the 1st day of November, 1997 and shall be made on the 1st
day of each month thereafter until the principal sum hereof and accrued
interest shall be paid in full, except that if not sooner paid, the
unpaid principal balance and accrued interest, if any, shall be due and
payable in full on January 1, 1999.
The aforesaid monthly payments when so made shall be applied first to
the payment of accrued interest and the balance to unpaid principal,
and upon the Maker's failure to make any of the payments required under
the terms of this Note, and upon the Maker's failure to cure said
default within twenty (20) days of receipt by the Maker of notice of
such default, at the sole option of the Holder, the entire remaining
unpaid principal and interest under this Note shall immediately become
due and payable. If this Note, after default, is placed in the hands of
an attorney for collection, whether suit is instituted on same or not,
the Maker hereof shall pay all reasonable costs and expenses of
collection, including reasonable attorneys' fees.
2. ASSET PURCHASE AGREEMENT
This Note is issued under and pursuant to the terms of that certain
Asset Purchase Agreement dated 16 October, 1997 and effective as of 1
October, 1997, by and between the Maker, as buyer, and Essex
Corporation, as seller (the "Asset Purchase Agreement"). This Note has
been given in partial payment of the purchase price for the Transferred
Assets and the Business. The payment of any amount due under this Note
is subject to among other things, all rights of offset which the Maker
or its assigns may have under the Asset Purchase
- 1 -
<PAGE>
Agreement or by applicable law. This Note is non-negotiable and shall
be subject in all respects to the terms and conditions of the Asset
Purchase Agreement; provided, however, that the Holder may assign or
pledge this Note as security to its creditors, notwithstanding anything
in this Note to the contrary.
3. SECURITY AGREEMENT
This Note is secured by and entitled to the benefits of that certain
Security Agreement of even date herewith. All of the terms, convenants
and conditions contained in the Security Agreement are expressly
incorporated by reference herein and made a part hereof. In the event
of any conflict between the provisions of this Note and the provisions
of the Security Agreement, the terms of the Security Agreement shall be
paramount and shall govern both the Note and the Security Agreement.
4. SUBORDINATION
This Note and the Security Agreement are subject in all respects to all
terms and conditions of that certain Subordination Agreement by and
between NationsBank N.A., the Maker and the Holder dated 16 October,
1997 and to the prior payment in full of all other Senior Indebtedness.
All of the terms, covenants and conditions contained in the
Subordination Agreement are expressly incorporated by reference herein
and made a part hereof. In the event of any conflict between the
provisions of this Note or the Security Agreement, on the one hand, and
the provisions of the Subordination Agreement, on the other hand, the
terms of the Subordination Agreement shall be paramount and shall
govern both the Note and the Security Agreement.
5. WAIVER OF DEMAND
The Maker hereby waives demand, protest, notice of presentment, notice
of protest and notice of the nonpayment and dishonor of this Note.
6. LATE FEE
If default is made in any payment of the principal of this Note, and,
to the extent permitted by law, interest hereon shall not be paid when
due, whether by acceleration or otherwise, and such default is not
cured within fifteen (15) days after notice thereof, the Holder may
impose a late fee in the amount of five percent (5%) of the past due
principal amount in addition to any other remedies that the Holder may
have available.
7. NOTICES
All notices, requests, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if sent by
overnight courier or telecopier (i) if to the Holder,
- 2 -
<PAGE>
to ESSEX CORPORATION, 9150 Guilford Road, Columbia, Maryland
21046-1891, ATTENTION: Harry Letaw, Jr., Chief Executive Officer,
telecopier number 301-953-7880, or at such other address or telecopier
number as may have been furnished to the Maker by the Holder in
writing, or (ii) if to the Maker, to STAR MOUNTAIN, INC., 3601
Eisenhower Avenue, Alexandria, Virginia 22304-6439, ATTENTION: A. Carl
von Sternberg, President, telecopier number 703-960-7009, or at such
other address or telecopier number as may have been furnished to the
Holder by the Maker in writing.
8. AMENDMENTS AND WAIVERS; SURRENDER
Neither this Note nor any term hereof may be changed, waived,
discharged, or terminated orally or in writing, except that any term of
this Note may be amended and the observance of any such term may be
waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written
consent of the Holder.
9. BENEFIT
All of the covenants, stipulations, promises, and agreements contained
in this Note by the Maker shall be binding upon the Maker and its
successors and shall inure to the benefit of and be enforceable by the
Holder.
10. PREPAYMENTS
The Maker, at its option, may prepay at any time without premium or
penalty, all or any part of the unpaid balance of the principal amount
of this Note, together with the unpaid interest on the principal amount
accrued to the date of such payment. Partial prepayment does not excuse
continuous payments of regular required installments.
11. MISCELLANEOUS
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia without regard to conflicts of law
principles. Any capitalized terms used herein but not defined shall
have the meaning attributable thereto in the Asset Purchase Agreement.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Note to be executed
effective as of the day and year first above written.
STAR MOUNTAIN, INC.
\Timothy Schimkus\
------------------------------
By: Timothy Schimkus
Title: Treasurer
- 4 -
<PAGE>
EXHIBIT E
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") dated as of the 16th day of
October, 1997 by and among Star Mountain, Inc., a Virginia corporation (the
"Buyer"), Essex Corporation, a Virginia corporation (the "Seller") and Arent Fox
Kintner Plokin & Kahn, a District of Columbia general partnership (the "Escrow
Agent").
WHEREAS, the Buyer and the Seller (hereinafter sometimes collectively
referred to as the "Parties"), are parties to that certain Asset Purchase
Agreement dated 16 October, 1997 and effective as, of 1 October, 1997 (the
"Asset Purchase Agreement"), pursuant to which the Buyer shall acquire the
business and certain assets of the Seller related to the Seller's "Systems
Effectiveness Division" in exchange for certain cash and non-cash consideration
specifically set forth in the Asset Purchase Agreement; and
WHEREAS, pursuant to the Asset Purchase Agreement, the Buyer has agreed
to place in escrow the sum of $625,000 to assure that certain contracts to
novated in the name of the Buyer, as more particularly described in the Asset
Purchase Agreement and listed on EXHIBIT 1 hereto, are timely and properly
novated or deemed to be novated in accordance therewith.
NOW THEREFORE, it is agreed as follows:
1. APPOINTMENT OF THE ESCROW AGENT. Each of the Parties hereby appoints
the Escrow Agent to serve as escrow agent with respect to the Escrow
(as defined below) pursuant to Section 1.2.7 of the Asset Purchase
Agreement, subject to the terms and conditions of this Agreement, and
the Escrow Agent hereby accepts such appointment.
. ESTABLISHMENT OF ESCROW. Simultaneously with the execution and
delivery of this Agreement, the Buyer shall deposit with the Escrow
Agent Six Hundred Twenty Five Thousand Dollars ($625,000) (the
"Escrow"). Within 5 business days after the Escrow Agent's receipt of
the Escrow, the Escrow Agent shall (i) invest the Escrow in 30 day
U.S. Treasury Bills (so long as the balance of the Escrowed Funds
exceeds the minimum amount necessary to purchase a 30 day U.S.
Treasury Bill) or maintain the amount in cash, to the extent the
Escrow Agent, in its sole and absolute discretion deems necessary, and
(ii) confirm its receipt of the Escrow from the Buyer by delivering
written notice of such receipt and investment to the Seller and the
Buyer. Upon investment of the Escrow, the funds invested pursuant to
the Escrow together with interest earned thereon, (are referred to as
the "Escrowed Funds"). The Escrowed Funds shall be held in escrow and
disbursed by the Escrow Agent in accordance with the terms of this
Agreement. All interest and other earnings on the Escrowed Funds shall
be held in escrow and disbursed to the Buyer by the Escrow Agent upon
expiration of the Escrow Term (as defined below). The Escrowed Funds
shall at all times be under the exclusive control of the Escrow Agent,
subject, however, to
- 1 -
<PAGE>
the terms of this Agreement. In no event shall all or any portion of
the Escrowed Funds be disbursed, transferred or released except upon
the signature of the Escrow Agent, and then only as expressly permitted
or required by this Agreement.
3. TERM OF ESCROW. The Escrow term (the "Escrow Term") shall begin on the
date hereof and shall terminate upon the earlier of (i) disbursement of
all of the Escrowed Funds in accordance with this Agreement or (ii) one
hundred twenty (120) days after the date of his Agreement.
4. DISBURSEMENT OF FUNDS FROM ESCROWED FUNDS. The Escrow Agent shall
disburse Escrowed Funds in accordance with the following terms and
conditions:
(a) During the Escrow Term (but in all events no less than 20 business
days prior to the date described in Section 3 (ii) above), the Seller shall, so
long as it is not in breach of the Asset Purchase Agreement or any of the other
Documents (as defined in the Asset Purchase Agreement), execute and deliver to
the Buyer and the Escrow Agent a Request for Payment in the form of EXHIBIT 2
hereto each time that one of the contracts listed in EXHIBIT 1 hereto
("Scheduled Contract(s)") has been duly novated or deemed to be novated into the
name of the Buyer in accordance with the Asset Purchase Agreement. The "Amount
Requested" by the Seller in any such notice shall be the lesser of (i) the
applicable "Value Assigned" to the subject Scheduled Contract novated or deemed
to be novated (as stated on Exhibit 1 hereto) or (ii) the amount by which the
applicable Value Assigned to all Scheduled Contracts theretofore novated or
deemed to be novated (and with respect to each of which the Buyer has given a
Confirmatory Notice in accordance with this Agreement) plus the applicable Value
Assigned of the Scheduled Contract in question exceeds $250,000. Within 5
business days of the Buyer's receipt of said Request for Payment, provided that
the Seller has established to the Buyer's reasonable satisfaction that the
subject Scheduled Contract has been duly novated or deemed to be novated in
accordance with the terms of the Asset Purchase Agreement, the Buyer will
execute and deliver to the Escrow Agent and the Seller a Confirmatory Notice in
the form of EXHIBIT 3 hereto stating that it confirms same and authorizing and
directing the Escrow Agent to pay to the Seller (i) the lesser of the amount
requested on the subject Request for Payment and (ii) the amount described in
Section 4(e) below; provided, however, that if the Buyer either does not deliver
a Confirmatory Notice in the form of EXHIBIT 3 hereto to the Seller and the
Escrow Agent or does not deliver a Contested Amount Notice in the form of
EXHIBIT 5 hereto contesting in writing the Seller's Request for Payment within 5
business days of the Buyer's receipt of such Request for Payment, the Escrow
Agent shall disburse to the Seller the amount indicated in such Request for
Payment within 5 days after the expiration of such 5 business day period. Within
5 business days of the receipt by the Escrow Agent of a Confirmatory Notice, the
Escrow Agent will disburse to the Seller the amount which the Buyer directs to
be released pursuant to such Confirmatory Notice.
(b) Provided that the Seller is not in breach of the Asset Purchase
Agreement or any of the other Documents, the Seller may on or before 20 October,
1997 and then again on or before 23 October, 1997 deliver to the Buyer and to
the Escrow Agent a Request for Advance Payment in the form of EXHIBIT 4 hereto
requesting the Escrow Agent to disburse each time to the Seller the sum of
- 2 -
<PAGE>
$125,000. Within 5 business days of the Escrow Agent's receipt of each such
Request for Advance Payment and provided that no written objection in the form
of a Contested Amount Notice in the form of EXHIBIT 5 hereto is received by the
Escrow Agent prior to disbursement, the Escrow Agent shall each time disburse to
the Seller the lesser of the sum of $125,000 from the Escrowed Funds (for a
total of $250,000) or the amount provided in Section 4(e) below.
(c) In the event that the Buyer delivers to the Escrow Agent and the
Seller a Contested Amount Notice in the form of EXHIBIT 5 hereto before the
expiration of the 5 business day period in response to a Request for Payment or
a Request for Advance Payment, in each case duly given by the Seller to the
Buyer and the Escrow Agent under this Section 4, the amount so requested in such
contested Request for Payment or Request for Advance Payment shall be considered
a contested amount. All contested amounts shall be held and either disbursed by
the Escrow Agent in accordance with any joint letter of instruction signed and
delivered by the Seller and the Buyer to the Escrow Agent (in form and substance
satisfactory to the Escrow Agent), interpleaded in a court of Escrow Agent's
choosing or otherwise disbursed in accordance with this Agreement. All amounts
other than contested amounts (and amounts theretofor disbursed to Seller) shall
upon the expiration of the Escrow Term, be disbursed to the Buyer. In the event
the Buyer timely objects to any Request for Payment or Request for Advance
Payment by sending a Contested Amount Notice, the Buyer shall send a separate
notice to the Seller setting forth in reasonable detail its basis for asserting
that there is a contested amount. Such separate notice shall be given by the
Buyer to the Seller within the applicable 5 business day period. The parties
agree that the failure of the Buyer in giving such separate notice to state any
claim or amount in any such separate notice shall not constitute a waiver of
such claim or amount or in any manner or to any extent compromise or prejudice
any claim not stated therein.
(d) Upon termination of the Escrow in accordance with Section 3 hereof,
the Escrow Agent shall promptly disburse to the Buyer all Escrow Funds (other
than contested amounts pursuant to Section 4(c) above and 4(e) below and amounts
theretofor disbursed to Seller) including earnings with respect to the Escrowed
Funds, after converting such Escrowed Funds to cash (to the extent the Escrowed
Funds have not already been converted by the Escrow Agent into cash). All
amounts earned with respect to the Escrowed Funds shall be reported by the
Escrow Agent as having been received by the Buyer (i.e. under the Buyer's
Federal employer identification number).
(e) In the event that the Buyer reasonably believes at any time during
the Escrow Term that the Seller is in breach of the Asset Purchase Agreement or
any of the other Documents, the Buyer shall be entitled to reduce the amount due
to the Seller under any Request for Payment or Request for Advance Payment by
the amount by which the Buyer's good faith estimate of the total damages the
Buyer has or may suffer as a result of all such breaches by the Seller exceeds
(i) the total of the amount requested in the subject Request for Payment or
Request for Advance Payment and (ii) any amounts previously so requested, which
amounts would have been, but for this Section 4(e), payable, to the Seller under
this Agreement. The total of all amounts withheld from the Seller pursuant to
this Section 4(e) shall be considered a contested amount for purposes of this
Section 4. The failure of the Buyer to cause any amount to be withheld from the
Seller in accordance with this
- 3 -
<PAGE>
Section 4(e) or otherwise shall not constitute a waiver of any default, the
Buyer being entitled to exercise all rights and remedies which it has under this
Agreement, the Asset Purchase Agreement, under any of the other Documents, by
law or otherwise.
5. REINVESTMENT OF ESCROWED FUNDS. During the Escrow Term, the
Escrow Agent shall reinvest the Escrowed Funds by purchasing one month
U.S. Treasury Bills. The Escrow Agent shall give the Seller and the
Buyer prompt written notice of all reinvestments, including the
reinvestment described in the preceding sentence, made by the Escrow
Agent of the Escrowed Funds or any portion thereof.
6. EXPENSES. The Escrow Agent shall be entitled to reimbursement of all
reasonable expenses, commissions, fees and other costs, including any
reasonable costs in connection with the interpleader described in
Section 8(k), incurred by the Escrow Agent acting pursuant to the terms
of this Agreement. Such expenses shall include any reasonable legal
costs incurred by the Escrow Agent acting in its capacity as escrow
agent hereunder. All such reasonable fees, costs and expenses shall be
borne equally by the Seller and the Buyer and shall be payable to the
Escrow Agent monthly within thirty (30) days after invoice.
7. DUTIES OF THE ESCROW AGENT. The Escrow Agent hereby agrees to perform
the following duties under this Agreement:
(a) Receive, and use reasonable efforts to act as custodian for, the
Escrowed Funds delivered to the Escrow Agent pursuant to this Agreement;
(b) Take such actions with respect to investment and reinvestment of
the Escrowed Funds, and disposition, delivery and application of the Escrowed
Funds as may be expressly permitted or required pursuant to this Agreement;
(c) Provide the notices and communications as may be expressly
permitted or required by this Agreement; and
(d) Take such other actions and perform such other duties as may be
required on the part of the Escrow Agent under the terms of this Agreement, or
pursuant to any modifications or amendments hereto affecting the duties of the
Escrow Agent to the extent consented to by the Escrow Agent in writing.
8. ADDITIONAL MATTERS WITH RESPECT TO THE ESCROW AGENT AND SUBSTITUTION OF
THE ESCROW AGENT. The following additional provisions shall govern the
rights, obligations and liabilities of the Escrow Agent under this
Agreement.
(a) The Escrow Agent's duties and responsibilities shall be limited to
those expressly set forth in this Agreement, and it shall not be subject to, nor
obligated to recognize, any other agreement between any or all of the parties
hereto even though reference thereto may be made
- 4 -
<PAGE>
herein; provided, however, that with the Escrow Agent's written acknowledgment,
this Agreement may be amended at any time or times by an instrument in writing
signed by or on behalf of all the parties hereto.
(b) If the Escrow Agent believes it to be reasonably necessary to
consult with legal counsel (which may be partners or employees of the Escrow
Agent) or other professionals concerning any of its duties in connection with
this Agreement, or in case it becomes involved in litigation on account of being
escrow agent hereunder (except if such litigation arises from the gross
negligence or willful misconduct of the Escrow Agent) or on account of having
received property subject hereto, or in case the Escrow Agent interpleads the
Escrowed Funds as described in Section 8(k), then in all cases, its reasonable
costs, expenses, and attorneys' fees and other professional fees shall be
reimbursed as provided in Section 6 hereof.
(c) The Escrow Agent shall keep proper books of record and account
relating to the Escrowed Funds.
(d) In the event that the Escrow Agent receives instructions from the
Seller or the Buyer with respect to the Escrowed Funds, which instructions, in
the Escrow Agent's reasonable opinion, are in conflict with other instructions
provided by a party to this Agreement or with any of the provisions of this
Agreement, the Escrow Agent shall immediately notify in writing the Seller and
the Buyer of such conflict whereupon the Escrow Agent shall be entitled to
refrain from taking any action until it shall be directed otherwise either
pursuant to a (i) a letter of instructions signed by both the Buyer and the
Seller directing the disposition of such funds or (ii) a certified copy of a
final judgment, or if appeal is taken, a finally determined judgment, of a court
of competent jurisdiction providing for the disposition of the funds. In the
event of a conflict between the provisions of Section 4 hereof and this Section
8(d), the provisions of Section 4 hereof shall govern.
(e) The Escrow Agent shall have no liability to anyone for any action
taken or omitted by the Escrow Agent acting in reliance upon instructions given
by the Seller and the Buyer.
(f) The Escrow Agent shall have no liability to anyone for an error in
judgment or for any act done or omitted by the Escrow Agent in good faith unless
caused by or arising out of any gross negligence or willful misconduct of the
Escrow Agent.
(g) The Escrow Agent shall be entitled to rely upon any writing
furnished to the Escrow Agent by the Seller or the Buyer and shall be entitled
to treat such writing as genuine and as the writing it purports to be.
(h) The Escrow Agent may resign at any time by giving at least ten (10)
days' prior written notice thereof to the other parties hereto; provided,
however, that the effective date of such resignation by the Escrow Agent shall
not be earlier than the effective date of the appointment of a successor the
Escrow Agent pursuant to Section 8(i) hereof.
- 5 -
<PAGE>
(i) If at any time the Escrow Agent resigns, is removed, dissolves or
otherwise becomes incapable of acting, or the position of the Escrow Agent
becomes vacant for any reason, the Buyer shall promptly appoint a successor the
Escrow Agent to fill such vacancy. If the Buyer fails to appoint a successor
agent prior to the effective date of the Escow Agent's resignation, the Escrow
Agent shall be entitled to appoint a successor of its choosing.
(j) Each successor Escrow Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor, the Seller and the Buyer a written
instrument accepting such appointment and agreeing to be bound by the provisions
of this Agreement. Immediately following the appointment of a successor Escrow
Agent, the predecessor Escrow Agent shall transfer all funds, documents and
instruments held under this Agreement to such successor Escrow Agent and the
predecessor Escrow Agent shall thereafter be absolved and released from any and
all further liability hereunder (other than liability for matters attributable
to the predecessor Escrow Agent's bad faith, gross negligence, willful
misconduct or violation of its express obligations under this Agreement).
(k) In the event of a dispute between the Buyer and the Seller
concerning the right of the other party to the Escrowed Funds, the Escrow Agent
shall have the right, in its sole discretion, to convert the Escrowed Funds to
cash and interplead the Escrowed Funds into a court of competent jurisdiction.
9. INDEMNIFICATION. The Seller and the Buyer jointly and severally shall
indemnify and hold the Escrow Agent harmless from actions, suits or
other charges incurred by or assessed against the Escrow Agent for
anything done or omitted by the Escrow Agent in the performance of its
duties hereunder, except those matters which result from the Escrow
Agent's bad faith, gross negligence or willful misconduct. This
indemnity shall survive the resignation of the Escrow Agent or the
termination of this Agreement.
10. NOTICES. Any notice, demand, consent, authorization, request, approval
or other communication given pursuant to this Agreement shall be
effective and valid only if in writing (including facsimile), signed by
the party giving such notice, addressed as follows:
If to Seller:
Essex Corporation
9150 Guilford Road
Columbia, Maryland 21046-1891
Attn: Harry Letaw, Jr.
Facsimile: (301) 953-7880
- 6 -
<PAGE>
with a copy to:
De Martino Finkelstein Rosen & Virga 1818 N Street, N.W.
Suite 400
Washington, D.C. 20036
Attn: Ralph V. De Martino, Esquire
Facsimile: (202) 659-1290
If to the Buyer:
Star Mountain, Inc.
3601 Eisenhower Avenue
Alexandria, Virginia 22304-6439
Attn: A. Carl von Sternberg, President
Facsimile: (703) 960-7009
with a copy to:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5337
Attn: David C. Haas
Facsimile: (202) 857-6395
If to the Escrow Agent:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Attn: David C. Haas
Facsimile: (202) 857-6395
All such notices shall be considered given on the date when received (refusal of
delivery shall constitute receipt) or if sent by telecopy when transmitted if a
confirmation of transmission is produced by the sending machine. Any party may
change its address by giving notice of such change to the other parties.
11. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by,
the laws of the District of Columbia, excluding the choice-of-law
principles of the law of the District of Columbia that would require
the application of the laws of a jurisdiction other than the District
of Columbia.
- 7 -
<PAGE>
12. WAIVER OF JURY TRIAL. EACH OF THE SELLER, THE BUYER AND THE ESCROW
AGENT KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT TO TRIAL BY JURY IN
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE,
BETWEEN ANY OF THE SELLER, THE BUYER OR THE ESCROW AGENT ARISING
OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. ANY OF THE SELLER, THE BUYER OR THE ESCROW AGENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
13. MERGER. This Agreement represents the final agreement of the Seller,
the Buyer and the Escrow Agent with respect to the matters contained
herein and may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral agreements, between any
of the Seller, the Buyer or the Escrow Agent.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original hereof, but all of which shall be
deemed a single document.
15. DEFINITIONS. All capitalized terms used herein and not defined herein
shall have the meanings ascribed thereto in the Asset Purchase
Agreement.
16. SEVERABILITY. Each part of this Agreement is intended to be severable.
If any term, covenant, condition or provision hereof is unlawful,
invalid or unenforceable for any reason whatsoever, and such
illegality, invalidity or unenforceability does not affect the
remaining parts of this Agreement, then all such remaining parts hereof
shall be valid and enforceable and have full force and effect as if the
invalid or unenforceable part had not been included.
17. RIGHTS CUMULATIVE; WAIVERS. The rights of each of the parties under
this Agreement are cumulative and may be exercised as often as any
party considers appropriate. The rights of each of the parties
hereunder shall not be capable of being waived or varied otherwise than
by an express waiver or variation in writing. Failure to exercise or
any delay in exercising any of such rights also shall not operate as a
waiver or variation of that or any other such right. Defective or
partial exercise of any of such rights shall not preclude any other or
further exercise of that or any other such right. No act or course of
conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a
suspension or any variation of any such right.
18. HEADINGS. The headings contained in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of
this Agreement or any provision hereof.
- 8 -
<PAGE>
19. CONSTRUCTION.
(a) The terms "hereby", "hereof", "hereto", "herein", "hereunder", and
any similar terms shall refer to this Agreement.
(b) Words of the masculine, feminine or neuter gender shall mean and
include the correlative words of other genders, and words importing the singular
number shall mean and include the plural number and vice versa.
(c) Words importing persons shall include firms, associations,
partnerships, corporations and other legal entities, including public bodies, as
well as natural persons.
(d) The terms "include", "including" and similar terms shall be
construed as if followed by the phrase "without limitation".
20. ASSIGNMENT. This Agreement and the terms, covenants, conditions,
provisions, obligations, undertakings, rights and benefits hereof shall
be binding upon, and shall inure to the benefit of, the undersigned
parties and their respective heirs, executors, administrators,
representatives and permitted successors and assigns.
21. NO THIRD PARTY BENEFICIARIES. No person, firm or other entity other
than the parties hereto and their permitted successors and assigns
shall have any rights or claims under this Agreement.
22. CONTROVERSY. In the event of any controversy or claim arising out of
or relating to this Agreement or the Asset Purchase Agreement or any
document executed pursuant to the Asset Purchase Agreement, the parties
consent to the Escrow Agent acting as counsel to the Buyer and the
Escrow Agent shall not be disqualified from representing the Buyer by
reason of its service as the Escrow Agent (including but not limited to
rendering advice to the Buyer with respect to any default by the Seller
under this Agreement, the Asset Purchase Agreement or the other
Documents or with respect to the manner in which it should comply with
its obligations under this Agreement) provided that the Escrow Agent
resigns as escrow agent hereunder within 15 days of a written request
of the Seller, such request to make specific reference to this Section
22.
(End)
- 9 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SELLER
ESSEX CORPORATION, A VIRGINIA CORPORATION
By: \Harry Letaw, Jr.\
Harry Letaw, Jr.
Chief Executive Officer
BUYER
STAR MOUNTAIN, INC., A VIRGINIA CORPORATION
By: \Timothy Schimkus\
Timothy Schimkus
Treasurer
ESCROW AGENT
ARENT FOX KINTNER PLOTKIN & KAHN
By: \David C. Hass\
David C. Haas
Partner
- 10 -
<PAGE>
ESCROW AGREEMENT
16 OCTOBER 1997
EXHIBIT 1
ESCROW DRAWDOWN SCHEDULE
1. Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by
the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
Value Assigned: If novated: $75,000
If not novated and not deemed
novated: $56,250
2. Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by
USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower
Avenue (AMSEL-AC-WB- B), Alexandria, Virginia 22331-0700, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
Value Assigned: $55,000
3. Subcontract No. 116054-24195, dated February 11, 1997, issued
by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division,
1430 Springhill Road, Suite 510, McLean, Virginia 22102
together with 2 delivery orders related thereto [novation or
deemed novation to occur once subcontract and both delivery
orders are novated or deemed novated].
Value Assigned: $55,000
4. Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101
NASA Road 1, Houston, Texas 77058-3698, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
Value Assigned: If novated: $50,000
If not novated and not deemed
novated: $37,500
- 1 -
<PAGE>
ESCROW AGREEMENT
16 OCTOBER 1997
5. Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations
Office, P.O. Box 5400, Albuquerque, New Mexico 87185-5400, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
Value Assigned: If novated: $350,000
If not novated and not deemed
novated: $262,500
6. Contract No. - Grant No. 1 R43 AA11608-01 dated September 22,
1997 issued by National Institutes of Health, 6000 Executive
Blvd., Rockville, MD 20892-7003 to Essex Corporation, 1040
Woodcock Road, Suite 227, Orlando, FL 32803.
Value Assigned: $10,000.
7. Contract No. - Grant No. 1 R43 AG14316-01 dated September 30,
1997 issued by National Institutes of Health, 6000 Executive
Blvd., Rockville, MD 20892-7003 to Essex Corporation, 1040
Woodcock Road, Suite 227, Orlando, FL 32803.
Value Assigned: $10,000.
8. Contract No. USZA92-97-C-0055 dated September 16, 1997 issued
by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, VA 22102.
Value Assigned: $10,000.
9. Contract No. N39998-97-M-5542 dated September 10, 1997 issued
by Dept. Of Defense Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation,1430 Springhill Road, Suite 510, McLean, VA 22102.
Value Assigned: $10,000.
- 2-
<PAGE>
ESCROW AGREEMENT
16 OCTOBER 1997
EXHIBIT 2
REQUEST FOR PAYMENT
To: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Attn: David C. Haas
and: Star Mountain, Inc.
3601 Eisenhower Avenue
Alexandria, Virginia 22304-6439
Attn: Carl von Sternberg, President
[Date]
Essex Corporation hereby certifies to the Escrow Agent and Star Mountain, Inc.
that the Scheduled Contract (as that term is defined in that certain Escrow
Agreement by and among Star Mountain, Inc., Essex Corporation and Arent Fox
Kantner Plotkin & Kahn dated 16 October, 1997 (the "Escrow Agreement")) listed
below has been duly novated in the name of Star Mountain, Inc. as of
_______________ [insert date of novation] and that Essex Corporation is not, as
of the date of this Notice, in breach of any of its obligations under the Asset
Purchase Agreement or any of the other Documents (as that term is defined in the
Asset Purchase Agreement between Essex Corporation and Star Mountain, Inc. dated
16 October, 1997) and that it is entitled to receive that amount set forth
below.
Contract Novated: [description of Scheduled Contract novated per EXHIBIT 1 to
---------
Escrow Agreement]
Value Assigned: ["Value Assigned" of Scheduled Contract novated or
deemed novated per EXHIBIT 1 to Escrow Agreement]
Amount Requested: $_________________
ESSEX CORPORATION
----------------------
Harry Letaw, Jr.
Chief Executive Officer
<PAGE>
ESCROW AGREEMENT
16 OCTOBER 1997
EXHIBIT 3
CONFIRMATORY NOTICE
To: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Attn: David C. Haas
and: Essex Corporation
9150 Guilford Road
Columbia, Maryland 21046-1891
Attn: Harry Letaw, Jr.
[Date]
Dear Mr. Haas:
Star Mountain, Inc. hereby authorizes and directs Arent Fox Kintner Plotkin &
Kahn, as escrow agent under that certain Escrow Agreement dated 16 October,
1997, by and among Star Mountain, Inc., Essex Corporation and Arent Fox Kintner
Plotkin & Kahn, to disburse to Essex Corporation the sum of $_____________ in
accordance with the Seller's Request for Payment dated _______________, a copy
of which is attached hereto.
Very truly yours,
STAR MOUNTAIN, INC.
----------------------
A. Carl von Sternberg
President
Attached: Seller's Request for Payment
<PAGE>
ESCROW AGREEMENT
16 OCTOBER 1997
EXHIBIT 4
REQUEST FOR ADVANCE PAYMENT
To: Star Mountain, Inc.
3601 Eisenhower Avenue
Alexandria, Virginia 22304-6439
Attn: Carl von Sternberg, President
and: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Attn: David C. Haas
[Date]
Essex Corporation hereby certifies to Star Mountain, Inc. and to Arent Fox
Kintner Plotkin & Kahn, as escrow agent that it is not, as of the date of this
request, in breach of any of its obligations under the Asset Purchase Agreement
between Essex Corporation and Star Mountain, Inc. dated 16 October, 1997 and
hereby requests that the Escrow Agent disburse to the Seller the sum of $125,000
pursuant to Section 4 of the Escrow Agreement dated 16 October, 1997 by and
among Essex Corporation, Star Mountain, Inc. and Arent Fox Kintner Plotkin &
Kahn as Escrow Agent.
ESSEX CORPORATION
----------------------
Harry Letaw, Jr.
Chief Executive Officer
<PAGE>
ESCROW AGREEMENT
16 OCTOBER 1997
EXHIBIT 5
CONTESTED AMOUNT NOTICE
To: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Attn: David C. Haas
and: Essex Corporation
9150 Guilford Road
Columbia, Maryland 21046-1891
Attn: Harry Letaw, Jr.
[Date]
Dear Mr. Haas:
Star Mountain, Inc. hereby authorizes and directs Arent Fox Kintner Plotkin &
Kahn, as escrow agent under that certain Escrow Agreement dated 16 October,
1997, by and among Star Mountain, Inc., Essex Corporation and Arent Fox Kintner
Plotkin & Kahn, to disburse to Essex Corporation the sum of $_____________. This
amount is to disbursed with reference to the Seller's Request for [Payment]
[Advance Payment] dated ___________, a copy of which is attached hereto. The
difference between the amount stated above and the amount requested in the
attached Request for [Payment] [Advance Payment] should be regarded as a
"contested amount" as defined in accordance with the terms of the Escrow
Agreement.
Very truly yours,
STAR MOUNTAIN, INC.
----------------------
A. Carl von Sternberg
President
Attached: Seller's Request for Payment [Advance Payment]
<PAGE>
EXHIBIT F
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated and effective as of 16 October, 1997, by
and between Star Mountain, Inc., a Virginia corporation with its principal
offices located at 3601 Eisenhower Avenue, Alexandria, Virginia 22304-6439 (the
"Borrower"), and Essex Corporation, a Virginia corporation, with its principal
offices located at 9150 Guilford Road, Columbia, Maryland 21046-1891 (the
"Secured Party").
W I T N E S S E T H:
WHEREAS, Secured Party and Borrower have entered into that certain
Asset Purchase Agreement dated 16 October, 1997 and effective 1 October, 1997,
by and between Borrower and Secured Party (the "Asset Purchase Agreement")
pursuant to which Borrower has purchased certain assets from Secured Party for
which a promissory note in the original principal amount of Three Hundred
Twenty-Five Thousand and no/100 Dollars ($325,000) has been given as part
payment therefore (the "Note"). The Note is dated as of 1 October, 1997 and is
made payable to Secured Party, with principal and interest as set forth in the
Note; and
WHEREAS, Secured Party has made and agreed to make such loan on the
express condition, among others, that Borrower execute and deliver this Security
Agreement.
NOW, THEREFORE, in consideration of said loan, the premises and the
mutual covenants and promises herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
In addition to the terms that are defined above, the following terms
shall be defined as follows:
"Borrower's address" means the address of Borrower as first set forth
above.
"Collateral" shall have the meaning set forth in Section 4 below.
"Equipment" means all machinery, equipment, furniture, fixtures and
other tangible personal property of Borrower not considered to be
"Receivables", "Inventory", or "General Intangibles", as those terms
are defined herein, now owned or hereafter acquired by Borrower,
together with all accessions thereto and all substitutions and
replacements thereof and parts therefor; all cash or non-cash proceeds;
and including, without limitation, all Equipment listed on any schedule
attached hereto.
- 1 -
<PAGE>
"General Intangibles" means all other intangible or intellectual
personal assets of Borrower not covered within the definition of
"Receivables", "Inventory" and "Equipment" above, whether now owned or
hereafter acquired, including but not limited to goodwill, patents,
trademarks, copyrights, and all rights under any application for any
patent, copyright or trademark.
"Inventory" means all goods, merchandise and other personal property
now owned or hereafter acquired by Borrower which are held for sale or
lease, or are furnished or are to be furnished under any contract of
service, or are raw materials, work-in process, supplies, components,
or materials used or consumed in Borrower's business, and all products
thereof, and all substitutions, replacements, additions or accessions
therefor and thereto; all cash or non-cash proceeds of all of the
foregoing, including insurance proceeds.
"Obligations" shall mean Borrower's obligations to pay and perform the
obligations set forth in Section 3.
"Receivables" means, whether now in existence or hereafter arising, all
accounts, contract rights, instruments, documents, chattel paper,
general intangibles (including, without limitation, chooses in action,
tax refunds, and insurance proceeds); any other obligations or
indebtedness owed to Borrower from whatever source arising; all rights
of Borrower to receive any payments in money or kind; all guarantees of
Receivables and security therefor; all cash or non-cash proceeds of all
of the foregoing; all of the right, title and interest of Borrower in
and with respect to the goods, services or other property which gave
rise to or which secure any of the Receivables and insurance policies
or other property relating thereto, and all of the rights of Borrower
as an unpaid seller of goods or services, including, without
limitation, the rights of stoppage in transit, replevin, reclamation
and resale; and all of the foregoing whether now existing or hereafter
created or acquired.
"Subordination Agreement" means that certain Subordination Agreement
between NationsBank, Secured Party and Borrower dated as of 16 October,
1997 and all such other agreements as Secured Party is required to
execute pursuant to the Asset Purchase Agreement to effect and/or
evidence the subordination of the Obligations to other lenders of
Borrower.
To the extent not defined in this Section, unless the context otherwise
requires, all other terms contained in this Agreement shall have the
meanings attributed to them by Article 9 of the Uniform Commercial Code
as in force on the date of this Security Agreement in the State in
which the Collateral is located, to the extent the same are used or
defined therein.
2. GRANT OF SECURITY INTEREST
To secure the payment and performance of the Obligations and subject to
the applicable terms of this Agreement, Borrower hereby grants to
Secured Party a continuing security
- 2 -
<PAGE>
interest in the Collateral as defined in Section 4 hereof, whether now
owned or hereafter acquired. Borrower agrees to execute all additional
documents, instruments, and agreements and take all additional steps
necessary or desirable to ensure that Secured Party shall at all times
have a perfected lien on all of the Collateral. Notwithstanding any
other provision of this Security Agreement to the contrary, all
Obligations of Borrower under this Security Agreement (as defined in
the Subordination Agreement) are subordinated to the Senior Obligations
(as defined in the Subordination Agreement) and are subject to the
provisions of the Subordination Agreement. In addition, and
notwithstanding any provision of this Agreement to the contrary, the
security interest granted to the Secured Party hereunder shall be
subordinate in all respects to (i) all liens and encumbrances relating
to any Senior Financing (as defined in the Asset Purchase Agreement)
and (ii) all such other liens and encumbrances which are contested by
the Buyer in good faith. The Buyer shall provide written notice to the
Seller itemizing all liens and encumbrances which it contests in good
faith. Within 60 days after the date hereof, the Buyer shall either
remove or subordinate to the security interest granted to the Seller
under this Agreement all liens and encumbrances on its assets other
than those referred to in (i) or (ii) of the preceeding sentence or pay
the balance then due on the Note.
3. THE OBLIGATIONS
The term "Obligations" as used in this Agreement shall mean Borrower's
liabilities, obligations and indebtedness of any kind, heretofore, now,
or hereafter owing, arising, due or payable under the Note and this
Security Agreement; and Borrower's liabilities, obligations and
indebtedness of any kind, heretofore, now, or hereafter owing, arising,
due or payable under this Security Agreement.
4. THE COLLATERAL
Except as otherwise set forth in this Agreement, the security interest
is granted in the following (referred to herein as the "Collateral"):
[X] Receivables
[X] Inventory
[X] Equipment
[X] General Intangibles
All ledger sheets, files, records, documents and instruments
(including, without limitation, computer programs, tapes and related
electronic data processing software) evidencing an interest in or
relating to the Collateral; and
- 3 -
<PAGE>
All instruments, documents, securities, cash, property and the proceeds
of any of the foregoing, owned by Borrower or in which Borrower has an
interest, which now or hereafter are at any time in possession or
control of Secured Party, in transit by mail or carrier to or from
Secured Party or in the possession of any third party acting on behalf
of Secured Party. Notwithstanding any provision of this Agreement to
the contrary, the Collateral shall not include any property or other
interests of Borrower, in which a security interest can not, by virtue
of any agreement under which it is held, be granted to Secured Party as
contemplated by this Agreement.
5. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower represents and warrants to Secured Party (and such
representations and warranties shall be continuing so long as any
Obligations shall remain outstanding), as follows:
Borrower has been duly organized and is validly existing and in good
standing under the laws of the Commonwealth of Virginia and is duly
qualified and in good standing to do business in those other
jurisdictions where it does business; Borrower has the power and
authority to own the Collateral, to enter into and perform this
Agreement and any other document or instrument delivered in connection
herewith, and to incur or secure the Obligations; and this Agreement
and all other related documents and instruments constitute valid,
binding obligations of Borrower and are enforceable against Borrower in
accordance with their terms; and
Borrower shall promptly execute and deliver all assignments,
certificates of title, conveyances, assignment statements, security
agreements, financing statements, continuation statements, and other
agreements, instruments and documents as may be reasonably requested by
Secured Party at any time to perfect and maintain the security
interests and liens granted herein by Borrower; and
Borrower shall pay promptly, when due, all taxes (including, without
limitation, all sales, use, excise, personal property, income,
withholding and corporate franchise taxes), assessments, governmental
charges, claims for labor, supplies, rent and any other obligations
which, if unpaid, might become a lien against any of its property
except liens for taxes not yet due and payable and liabilities being
contested in good faith and with due diligence by Borrower and except
for liabilities the amount of which or the contest thereof do not, in
Security Party's sole discretion, adversely affect Borrower's financial
condition, ability to repay the Obligations, the security interests and
liens of Secured Party in the Collateral or the priority of such
security interests and liens; and Borrower shall not permit, or suffer
to remain, and will promptly discharge, any lien against the Collateral
arising from any unpaid tax, assessment, levy or governmental charge
unless Borrower contests such lien or liens in good faith, provides
Secured Party with all facts concerning the lien, and provides Secured
Party, at Secured Party's request, with a reasonable bond to protect
against such loss; and
- 4 -
<PAGE>
In the event Borrower shall fail to pay any such tax, assessment, levy
or governmental charge or to discharge any such lien or contest same in
good faith, then Secured Party, without waiving or releasing any
obligation or default of Borrower hereunder, may at any time or times
hereafter make such payment, settlement, compromise or release or cause
to be released any such lien, and take any other action with respect
thereto which Secured Party deems advisable. All sums paid by Secured
Party in satisfaction of, or on account of any tax, levy or assessment
or governmental charge, or to discharge or release any lien, and any
expenses, including reasonable attorneys' fees, court costs and other
charges relating thereto, shall become a part of the Obligations,
payable on demand.
Borrower agrees to deliver to Secured Party within 30 days after the
end of each quarter and within 45 days after the end of each fiscal
year unaudited consolidated financial statements of the Borrower.
Secured Party agrees to treat such financial statements as strictly
confidential.
Borrower agrees, upon written request of Secured Party, to furnish
Security Party with copies of certificates of insurance with respect to
such insurance as Borrower may maintain on the Collateral.
6. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
a. Default in the payment of any principal, interest or other
charges with respect to any of the Obligations as and when
due;
b. Default in the observance or performance of any covenant or
agreement of Borrower set forth in the Note or any of the
Collateral Documents, including the Asset Purchase Agreement
or in any agreement, note, or instrument heretofore, now or
hereafter executed by Borrower in favor of Secured Party and
such default is not cured within 30 days after notice thereof
is given to Borrower by Secured Party; or
c. Borrower's insolvency, business failure, dissolution, or
assignment for the benefit of creditors, the filing by
Borrower of any petition in bankruptcy or for reorganization
for receivership or to effect a plan or arrangement with
creditors, or any such filing is made against Borrower and is
not vacated within forty-five (45) days of commencement.
7. ACCELERATION
If any Event of Default shall occur, then or at any time thereafter
while such Event of Default shall continue, Secured Party by notice to
Borrower, may declare all Obligations to be
- 5 -
<PAGE>
immediately due and payable, without protest, presentment or further
notice, all of which are expressly waived by Borrower. If such an Event
of Default shall occur, Secured Party also may exercise any rights
granted in the Note or the Security Agreement.
8. RIGHTS AND REMEDIES
Upon the occurrence of an Event of Default, the Security Party shall
have all rights and remedies of a secured party under the Virginia
Uniform Commercial Code.
9. GENERAL PROVISIONS
a. The failure of Secured Party at any time or times hereafter to
require strict performance by Borrower of any of the
provisions, warranties, terms and conditions contained in the
Note, this Agreement, the Security Agreement or in any other
agreement, guaranty, note, instrument or document now or at
any time or times hereafter executed by Borrower and delivered
to Secured Party shall not waive, affect or diminish any right
of Secured Party at any time or times thereafter to demand
strict performance thereof; and, no rights of Secured Party
hereunder shall be deemed to have been waived by any act or
knowledge of Secured Party, its agents, officers or employees,
unless such waiver is contained in an instrument in writing
signed by an officer of Secured Party and directed to Borrower
specifying such waiver. No waiver by Secured Party of any of
its rights shall operate as a waiver of any other of its
rights or any of its rights on a future occasion.
b. Any demand or notice required or permitted to be given
hereunder shall be deemed delivered when deposited in
certified or registered United States Mail, postage prepaid,
to the other party at its address first set forth above, or at
such other address as the other party may direct from time to
time in writing.
c. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law; should any portion of this Agreement be
declared invalid for any reason in any jurisdiction, such
declaration shall have no effect upon the remaining portions
of this Agreement. Furthermore, the entirety of this Agreement
shall continue in full force and effect in all other
jurisdictions and said remaining portions of this Agreement
shall continue in full force and effect in the subject
jurisdiction as if this Agreement had been executed with the
invalid portions thereof deleted.
d. The provisions of this Agreement shall be binding upon and
shall inure to the benefit of the heirs, administrators,
successors and assigns of Secured Party and Borrower;
provided, however, Borrower may not assign any of its rights
or delegate any of its obligations hereunder without the prior
written consent of Secured Party.
- 6 -
<PAGE>
e. If at any time or times hereafter, Secured Party shall employ
counsel in connection with the execution and consummation of
the transactions contemplated by this Agreement or to
commence, defend or intervene, file a petition, complaint,
answer, motion or other pleading, or to take any action in or
with respect to any suit or proceeding (bankruptcy or
otherwise) relating to this Agreement, the Collateral or any
other agreement, guaranty, note, instrument or document
heretofore, now or at any time or times hereafter executed by
Borrower and delivered to Secured Party, or to protect
collect, lease, sell, take possession of or liquidate any of
the Collateral, or to attempt to enforce any security interest
in any of the Collateral, or to enforce any rights of Secured
Party hereunder whether before or after the occurrence of any
Event of Default, or to collect any of the Obligations, then
in any of such events, all of the reasonable attorneys' fees
arising from such services, and any expenses, costs and
charges relating thereto, shall be part of the Obligations,
payable on demand and secured by the Collateral, including
fees and costs relating to the filing of financing statements
to the extent such filings are reasonably required in
connection with this Agreement.
f. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same
instrument.
g. Each reference herein to Secured Party shall be deemed to
include its successors and assigns, and each reference to
Borrower and any pronouns referring thereto as used herein
shall be construed in the masculine, feminine, neuter,
singular or plural, as the context may require, and shall be
deemed to include the legal representatives, successors and
assigns of Borrower, all of whom shall be bound by the
provisions hereof. Headings are used for convenience of
reference only and shall not be used to interpret, define or
limit the provisions hereof.
h. Time is of the essence in this Agreement. Borrower shall at
all times promptly pay and perform all Obligations.
10. GOVERNING LAW; JURISDICTION AND VENUE
THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS
LOCATED. IN ANY LITIGATION IN CONNECTION WITH OR TO ENFORCE THIS
SECURITY AGREEMENT, BORROWER HEREBY IRREVOCABLY CONSENTS AND CONFERS
PERSONAL JURISDICTION ON THE STATE COURTS OF THE COUNTY IN WHICH THE
COLLATERAL IS LOCATED, OR ON THE UNITED STATES DISTRICT COURT OR THE
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT IN WHICH THE COLLATERAL
IS LOCATED. BORROWER EXPRESSLY WAIVES ANY OBJECTIONS AS TO VENUE IN ANY
SUCH COURTS AND AGREES
- 7 -
<PAGE>
THAT SERVICE OR PROCESS MAY BE MADE ON BORROWER BY MAILING A COPY OF
THE SUMMONS AND COMPLAINT BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO BORROWER'S ADDRESS. NOTHING CONTAINED HEREIN
SHALL, HOWEVER, PREVENT SECURED PARTY FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS WITHIN ANY OTHER STATE OR JURISDICTION OR FROM
OBTAINING PERSONAL JURISDICTION BY ANY OTHER MEANS AVAILABLE BY
APPLICABLE LAW.
ALL WAIVERS SET FORTH IN THIS SECURITY AGREEMENT ARE MATERIAL
INDUCEMENTS FOR SECURED PARTY TO ACCEPT THIS SECURITY
AGREEMENT.
(End)
- 8 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Security Agreement
to be executed effective as of the date first written above.
BORROWER: ATTEST:
STAR MOUNTAIN, INC.
\Timothy Schimkus\ \Irene M. Byrne\
By: ____________________________ By: _____________________________
Timothy Schimkus Irene M. Byrne
Treasurer Secretary
SECURED PARTY: ATTEST:
ESSEX CORPORATION
\Harry Letaw, Jr.\ \Kimberly DeChello\
By: ____________________________ By: _____________________________
Harry Letaw, Jr. Kimberly DeChello
Chief Executive Officer Assistant Secretary
- 9 -
<PAGE>
EXHIBIT G
FORM OF
SUBORDINATION AGREEMENT
(The Registrant hereby agrees to furnish supplementally to the Securities and
Exchange Commission or other party upon request a paper copy of Exhibit G.)
<PAGE>
EXHIBIT H
CERTIFICATION OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986 provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by ESSEX
CORPORATION, a Virginia corporation (the "Transferor"), the undersigned hereby
certifies to transferee, STAR MOUNTAIN, INC., a Virginia corporation, as
follows:
1. Transferor is not a nonresident alien individual, foreign
corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. tax identification number is 54-0846569; and
3. Transferor's address is
Essex Corporation.
9150 Guilford Road
Columbia, Maryland 21046-1891
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by Star Mountain, Inc. and that any false statement
contained herein could be punished by fine, imprisonment, or both.
(End)
- 1 -
<PAGE>
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct,
and complete.
Date: 16th day of October, 1997 ESSEX CORPORATION
TRANSFEROR
\Harry Letaw, Jr.\
By: ____________________________
Harry Letaw, Jr.
Chief Executive Officer
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 1.1.2
EXCLUDED ASSETS
1. Licenses and software known as Deltek.
2. Licenses and software known as Novell.
3. List of Contracts and related receivables and proceeds
therefrom per attached as "Contracts Listing - Assets Not
Transferred".
4. Cash on hand.
5. Pre-paid equipment repairs for printers and broken equipment
shipped by UPS.
<PAGE>
SYSTEMS EFFECTIVENESS DIVISION 06-Oct-97
CONTRACT LISTING - ASSETS NOT TRANSFERRED
DELTEK CONTRACT
NO. NO. CUSTOMER
- --------------------------------------------------------------------------------
1015 PO 440191 VAIL/NAVSEA
1023 PO 440351 VAIL/NAVSEA
1024 PO 440371 VAIL/NAVSEA
1025 N00024-89-4015 VAIL/NAVSEA
1032 A1009-007/50696-A VAIL/NAVSEA
1035 16R01-SC-064-50939 RSG/NAVSEA
1036 N00102-91-C-0460 SUBMEPP/PORTSMOUTH NAVAL SHIPPING
1038 CIT#ETH-100-02 CTI/SMMSO
1039 CIT#ETH-100-02 CTI/SMMSO
1040 N00102-91-C-0460 SUBMEPP/PORTSMOUTH NAVAL SHIPPING
1880 N00024-86-C-2135 SMMSO/BRIDGE FY 87
2251 1703C2383 ADTECH/OTEA
2255 DTFH61-89-C-00096 FEDERAL HIGHWAY ADMINISTRATION
2270 00794-002 PRC/AFOTEC
2272 DA005-90-D-0023 US ARMY AVIATION/HFE
2280 DAAL03-86-D-0001 NTSC VIA BATTELLE
2281 00639-SC-002 PRC INC
2309 LTR 17JAN92 (DTFJ61-90-C-0071) TRI/FHWA
2312 OPM 91-2975 PMO/HDL
2314 16R01-SC-064/5E168 RSG
2318 N00102-91-C-0460 SUBMEPP/PORTSMOUTH NAVAL SHIPPING
2319 15-930053-78 SAIC/ARMY
2322 91-SC-181/ETH-300 CTI
2325 PO SNC196-064 GENERAL DYNAMICS
2339 N62269-93-C-0217 NAVAL AIR WARFARE
2342 N00019-92-C-0157 NAVAIR WASHINGTON
2343 N00102-91-C-0460 SUBMEPP/PORTSMOUTH NAVAL SHIPPING
2350 F41624-93-C-3003 BROOKS AFB, TEXAS
2355 91-SC-181/ETH-300 CTI
2356 PO SNC196-064 GENERAL DYNAMICS
2357 T8200-3-3531/01-XS TRANSPORT CANADA
2358 16R01-SC-064/TI4GO RSG/NAVSEA (SPCC)
2360 TCN/94004-DOO 1086 BATELLE
2363 16R01-SC-064/TI4GO RSG/SMMSO
2365 NAS9-19107 NASA
2366 NAS9-19106 NASA, HOUSTON, TX
2368 N00102-91-C-0460 SUBMEPP/PORTSMOUTH NAVAL SHIPPING
2369 N39998-94-C-2241 OFFICE OF SPECIAL TECHNOLOGY
2370 16R01-SC-064/TI4GO RSG/US COAST GUARD
<PAGE>
SYSTEMS EFFECTIVENESS DIVISION 06-Oct-97
CONTRACT LISTING - ASSETS NOT TRANSFERRED
DELTEK CONTRACT
NO. NO. CUSTOMER
- --------------------------------------------------------------------------------
2371 16R01-SC-064/TI4GO RSG/NAVSEA
2374 16R01-SC-064/TI4GO RSG/NAVSEA
2378 PO SNC196-064 GENERAL DYNAMICS
2379 16R01-SC-064/TI4GO RSG/NAVSEA
2400 N39998-95-C-5334 OFFICE OF SPECIAL TECHNOLOGY
2412 DAAB12-96-C-0012 FT BELVOIR
2414 N00014-96-C-0308 OFFICE OF NAVAL RESEARCH
2415 N00014-96-C-0309 OFFICE OF NAVAL RESEARCH
2416 PO 12552 CAMBER CORPORATION
2417 DAAB07-97-C-0011 TACOM
2419 DAAB07-97-P-6012 USA CECOM ACQ CENTER
2422 DAAB07-97-V-6022 CECOM/FT BELVOIR
2423 DAAB07-97-V-6022 CECOM/FT BELVOIR
2425 DAAB07-97-D-6083 CECOM/FT BELVOIR
2906 OPM-97-0075 PMO JOINT VENTURE
3130 N00024-88-C-2122 NAVSEA/SMMSCO
3500 HJF-91-SC-003 HJF/DOE OFFICE
3501 HJF-91-SC-003 HJF/DOE OFFICE
4801 89TSGSB50-02 TSG/NAVAIR
4802 89TSGSB50-02 TSG/NAVAIR
4803 89TSGSB50-02 TSG/NAVAIR
4804 89TSGSB50-02 TSG/NAVAIR
4805 89TSGSB50-02 TSG/NAVAIR
4806 89TSGSB50-02 TSG/NAVAIR
4807 89TSGSB50-02 TSG/NAVAIR
5216 N62269-88-D-0109 NADC
5221 N62269-88-D-0109 NADC
5222 N62269-88-D-0109 NADC
5223 N62269-88-D-0109 NADC
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 1.2
ESCROW DRAWDOWN SCHEDULE
1. Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by
the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
Value Assigned: If novated: $75,000
If not novated and not deemed
novated: $56,250
2. Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by
USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower
Avenue (AMSEL-AC-WB- B), Alexandria, Virginia 22331-0700, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
Value Assigned: $55,000
3. Subcontract No. 116054-24195, dated February 11, 1997, issued
by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division,
1430 Springhill Road, Suite 510, McLean, Virginia 22102
together with 2 delivery orders related thereto [novation or
deemed novation to occur once subcontract and both delivery
orders are novated or deemed novated].
Value Assigned: $55,000
4. Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101
NASA Road 1, Houston, Texas 77058-3698, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
Value Assigned: If novated: $50,000
If not novated and not deemed
novated: $37,500
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
5. Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations
Office, P.O. Box 5400, Albuquerque, New Mexico 87185-5400, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia, 22102.
Value Assigned: If novated: $350,000
If not novated and not deemed
novated: $262,500
6. Contract No. - Grant No. 1 R43 AA11608-01 dated September 22,
1997 issued by National Institutes of Health, 6000 Executive
Blvd., Rockville, MD 20892-7003 to Essex Corporation, 1040
Woodcock Road, Suite 227, Orlando, FL 32803.
Value Assigned: $10,000.
7. Contract No. - Grant No. 1 R43 AG14316-01 dated September 30,
1997 issued by National Institutes of Health, 6000 Executive
Blvd., Rockville, MD 20892-7003 to Essex Corporation, 1040
Woodcock Road, Suite 227, Orlando, FL 32803.
Value Assigned: $10,000.
8. Contract No. USZA92-97-C-0055 dated September 16, 1997 issued
by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, VA 22102.
Value Assigned: $10,000.
9. Contract No. N39998-97-M-5542 dated September 10, 1997 issued
by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation,1430 Springhill Road, Suite 510, McLean, VA 22102.
Value Assigned: $10,000.
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 1.3
ASSUMED LIABILITIES
1. CONTRACTS
1.1 Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by
the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
1.2 Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by
USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower
Avenue (AMSEL-AC-WB- B), Alexandria, Virginia 22331-0700, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
1.3 Subcontract No. 116054-24195, dated February 11, 1997, issued
by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division,
1430 Springhill Road, Suite 510, McLean, Virginia 22102
(attached) -- including Delivery Order DAAB07-96-D-H753.
1.4 Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101
NASA Road 1, Houston, Texas 77058-3698, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
1.5 Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations
Office, P.O. Box 5400, Albuquerque, New Mexico 87185-5400, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
1.6 Grant No. 1 R43 AA11608-01 dated September 22, 1997 issued by
National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock
Road, Suite 227, Orlando, FL 32803.
1.7 Grant No. 1 R43 AG14316-01 dated September 30, 1997 issued by
National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock
Road, Suite 227, Orlando, FL 32803.
1.8 Contract No. USZA92-97-C-0055 dated September 16, 1997 issued
by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, VA 22102.
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
1.9 Contract No. N39998-97-M-5542 dated September 10, 1997 issued
by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation, 1430 Springhill Road, Suite 510,McLean, VA 22102.
1.10 Agreement for Consulting Services, dated June 7, 1993, between
Edward H.Frederick, Jr., and Essex Corporation.
1.11 Agreement for Consulting Services, dated March 11, 1997,
between Stephen A. Povah and Essex Corporation.
1.12 Subcontract No. 2418A, dated December 16, 1996, between the
University of Central Florida and Essex Corporation.
1.13 Subcontract No. 2420-01, dated March 21, 1997, between James
Madison University and Essex Corporation.
1.14 Subcontract No. 2418B, dated December 16, 1996, between Jones
and Jones Research Associates and Essex Corporation.
2. FACILITY LEASES
2.1 Lease, dated October 1, 1986, between Freida V. Bruer and
Essex Corporation, a Virginia corporation, for one 14' x 70'
mobile office unit.
2.2 Lease, dated December 8, 1994, between TDP Corporation, a
Virginia corporation, and Essex Corporation, a Virginia
corporation, for the premises identified as Suite 510 of the
building located at 1430 Springhill Road, McLean Virginia,
commonly known as Tysons Dulles Plaza II.
2.3 Lease, dated April 1, 1997, between Koger Equity, Inc., a
Florida corporation, and Essex Corporation, a Virginia
corporation, for the premises identified as Suite 227 of the
building located at 1040 Woodcock Road, Orlando Florida,
commonly known as Palmetto.
3. CAPITAL EQUIPMENT LEASES
3.1 Equipment Lease Agreement No. 493167, dated October 12, 1995,
between AT&T Capital Leasing Services and Essex Corporation.*
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
3.2 Lease No. 118147001, dated October 10, 1995, between Potomac
Funding & Leasing Association and Essex Corporation.*
3.3 Equipment Lease dated October 26, 1995, between Copelco
Capital, Inc., P.O. Box 728, Park Ridge, NJ 07656-0728 and
Essex Corporation (Minolta copier rental).
3.4 Equipment Lease dated December 12, 1996, between AT&T Credit
Corp., P.O. Box 849, Parsippany, NJ 07054 and Essex
Corporation (telephone system lease).
3.5 Equipment Lease between Minolta Leasing Services (Chemical
Leasing), P.O. Box 105819, Atlanta, GA 30348-5819 and Essex
Corporation (Orlando copier lease).
3.6 Equipment Lease dated December 9, 1996, between Nissan Motor
Acceptance Corp., P.O. Box 105810, Atlanta, GA 30348-5810 and
Essex Corporation (truck lease).
3.7 Equipment Lease between Pitney Bowes, 8875 Dex Ellis Trail,
#501, Jacksonville, FL 32256-1221 and Essex Corporation
(postage meter rental, model 0015743, serial no. 0001632762).
* The parties acknowledge that those certain capital equipment leases
numbered 3.1 and 3.2 are in the process of being assigned and that the
Seller, with the cooperation of the Buyer, will use its best efforts to
effect such assignment as soon as possible (the Buyer being entitled to
the use of the subject equipment until and after the effective date of
such assignments).
4. ACCRUED VACATION, LEASE MAINTENANCE AGREEMENTS AND ACCOUNTS PAYABLE
4.1 Accrued Vacation
Accrued vacation not to exceed $66,825.
4.2 Accounts payable which relate directly to the Business in a
total amount not to exceed $152,170.
4.3 Additional Materials and Miscellaneous Overhead/Indirect Items
4.3.1 All of the items listed in the Sections 4.3.2 and
4.3.3 are to be assumed by the Buyer only to the
extent same were properly incurred with reference
to, and are recoverable by the Buyer under, one of
the contracts listed in Section 1 to this Schedule
1.3, the assumption by the Buyer to be effective
- 3 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
only when and if the contract with respect to which
the amount is so incurred (and under which it is so
recoverable) has been novated or fully
subcontracted in the name of the Buyer in
accordance with Section 1.1.4 of this Agreement.
4.3.2 Additional materials (direct costs), in an amount
not to exceed $150,000, and travel (direct costs),
in an amount not to exceed $25,000, to the extent
any of the foregoing were properly incurred by the
Seller pursuant to one or more of the government
contracts being assigned/novated to the Buyer under
this Asset Purchase Agreement.
4.3.3 Miscellaneous overhead/indirect items for which no
invoice(s) have been received will be allocated to
each of the Seller and Buyer on a pro rata basis
according to which party benefitted; provided,
however, that in no event shall Seller's liability
exceed $25,000 for the foregoing miscellaneous
overhead/indirect expenses, to the extent any of
the foregoing were properly incurred by the Seller
pursuant to one or more of the government contracts
being assigned/novated to the Buyer under this
Asset Purchase Agreement.
5. LEASE MAINTENANCE AGREEMENTS
5.1 Maintenance Agreement dated March 31, 1997, between Avid
Technology, Inc., P.O. Box 3197, Boston, MA 02241-3197 and
Essex Corporation (video lab maintenance).
5.2 Maintenance Agreement dated October 26, 1995, between Gold
Office Products, 14620 Rothgeb Drive, Rockville, MD 20850 and
Essex Corporation (Minolta copier maintenance agreement).
5.3 Maintenance Agreement dated December 12, 1996, between AT&T,
5450 N.W. 33rd Avenue, Suite 106, Ft. Lauderdale, FL 33309 and
Essex Corporation (post warranty
maintenance).
5.4 Maintenance Agreement 5320-3128468, dated January 14, 1997,
between Copytronics, Inc., P.O. Box 5489, Jacksonville, FL
32247 and Essex Corporation (Minolta copier 5320, serial no.
3128468, maintenance and extra copier).
- 4 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 1.4
ALLOCATION OF PURCHASE PRICE
FORM 8594 - ASSET ACQUISITION STATEMENT
UNDER SECTION 1060
PART II ASSETS TRANSFERRED - To be completed by all filers of an original
statement
<TABLE>
<CAPTION>
4. Assets Aggregate Fair Market Value (Actual Amount for Class I)
- --------- -------------------------------------------------------
<S> <C>
Class I $ 0.00
Class II $ 0.00
Class III $ 547,381.17
Class IV $ 927,618.83
Total $ 1,475,000.00
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.3
EXCEPTIONS TO VALIDITY
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.5
FINANCIAL REPORTS
1. Form 10-KSB (U.S. Securities & Exchange Commission) for fiscal
year ended December 29, 1996.
2. Form 10-QSB (U.S. Securities & Exchange Commission) for
quarterly period ending March 30, 1997.
3. Form 10-QSB (U.S. Securities & Exchange Commission) for
quarterly period ending June 29, 1997.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.8
POWERS OF ATTORNEY; LIMITATIONS ON COMPETITION; GUARANTEES
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.9
SIGNIFICANT CUSTOMERS
<TABLE>
SYSTEMS EFFECTIVENESS DIVISION CUSTOMER LIST
YR END 1996
<CAPTION>
CUSTOMER REVENUE %
- ----------------- ----------------- --------
<S> <C> <C>
DOE $2,503,451.55 48.50
FT. BELVOIR $767,906.42 14.88
NASA $532,171.72 10.31
FT. RUCKER $361,965.34 7.01
FHWA $301,529.69 5.84
NSF $234,001.23 4.53
</TABLE>
To the best of Essex's knowledge, the following information relates to potential
future customer actions regarding current or future business.
1. DOE Letter dated August 29, 1997 from Mr. M. Frietze, Chief, AL Support
Branch to Mr.E. Edwards, Essex.
2. DOE Memorandum dated June 24, 1997 from Mr. D. To, Contracting Officer
Representative to Mr. E. Edwards, Essex.
3. Essex letter dated June 26, 1997 from Mr. E. Edwards, Essex to Mr. D.
To, DOE COR.
4. Secretary of Energy Pena's "Worst Case Scenario Budget Exercise" dated
July 31, 1997 (4 pages).
5. Orlando operation dependent upon Small Business Innovative Research
(SBIR) contracts which are restricted for award to entities in various
ways (number of employees, annual revenues).
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.10
GOVERNMENTAL APPROVALS
1. GOVERNMENTAL APPROVALS
1.1 Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by
the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
1.2 Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by
USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower
Avenue (AMSEL-AC-WB- B), Alexandria, Virginia 22331-0700, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
1.3 Subcontract No. 116054-24195, dated February 11, 1997, issued
by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division,
1430 Springhill Road, Suite 510, McLean, Virginia 22102
including delivery order DAAB07-96-D-H753.
1.4 Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101
NASA Road 1, Houston, Texas 77058-3698, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
1.5 Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations
Office, P. O. Box 5400, Albuquerque, New Mexico 87185-5400, to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean,
Virginia 22102.
1.6 Contract - Grant No. 1 R43 AA11608-01 dated September 22, 1997
issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock
Road, Suite 227, Orlando, FL 32803.
1.7 Contract No. USZA92-97-C-0055 dated September 16, 1997 issued
by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, VA 22102.
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
1.8 Contract No. N39998-97-M-5542 dated September 10, 1997 issued
by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft.Washington, MD 20744 to Essex
Corporation, 1430 Springhill Road, Suite 510,McLean, VA 22102.
1.9 Contract - Grant No. 1 R43 AG14316-01 dated September 30, 1997
issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock
Road, Suite 227, Orlando, FL 32803.
2. FILINGS WITH GOVERNMENTAL AGENCIES
2.1 Amendment to UCC financing statements in Alabama, and Virginia
to release certain collateral covered thereby pursuant to a
Security Agreement, dated December 29, 1995, between Essex
Corporation and a consortium of debenture holders under a 10%
Convertible Collateralized Due 2000 Debentures, dated December
29, 1995.
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.11
ADVERSE CHANGES
None, except for borrowings in normal course of business under line of
credit from Signet Bank.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.13
NON-COMPLIANCE WITH LAWS
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.14
EMPLOYEE BENEFITS
As listed in Essex Corporation Employee Benefits Program and Flexible
Benefits Plan - Plan Year 1997/98
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.16
INSURANCE
LOCATION COVERAGE LIMITS
- --------------------------------------------------------------------------------
1. ALL general $1 million per occurrence combined single limit
liability $2 million per location aggregate
$2 million per location products/completed ops
aggregate based on $183,000 VA payroll- 47366,
30 NM students- 47474, $36,000 FL payroll and
$60,000 AL payroll
2. VA property $228,000 contents, $125,000 valuable papers
3. NM property nil
4. FL property $8,000 contents, $25,000 valuable papers
5. AL property $15,000 trailers, $25,000 valuable papers
6. VA workers 100/500/100 emp liability based on $183,000
compensation payroll- 8810
7. NM workers 100/500/100 emp liability based on $263,500
compensation payroll- 8868, $48,500- 8742, $20,000- 3574,
$11,500- 9014
8. FL workers 100/500/100 emp liability based on $36,000
compensation payroll- 8810
9. AL workers 100/500/100 emp liability based on $60,000
compensation payroll- 8810
10. ALL umbrella $4 million per occurrence combined single limit
$4 million per location aggregate
$4 million per location products/completed ops
aggregate
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.17
CONTRACTS
1. Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by the
Directorate of Contracting, USAAPGSA, Ryan Building, APG, Maryland
21005-5001, to Essex Corporation, 1430 Springhill Road, Suite 510,
McLean, Virginia 22102.
2. Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by USA
CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower Avenue
(AMSEL-AC-WB-B), Alexandria, Virginia 22331-0700, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
3. Subcontract No. 116054-24195, dated February 11, 1997, issued by
Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia 22070, to
Essex Corporation, Systems Effectiveness Division, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102 including Delivery Order
DAAB07-96-D-H753.
4. Contract No. NAS9-97022, dated December 2, 1996, issued by NASA Johnson
Space Center, S&LS Acquisition Management, 2101 NASA Road 1, Houston,
Texas 77058-3698, to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, Virginia 22102.
5. Contract No. DE-AC04-93AL91124, dated September 15, 1993, issued by the
Department of Energy, Albuquerque Operations Office, P.O. Box 5400,
Albuquerque, New Mexico 87185-5400, to Essex Corporation, 1430
Springhill Road, Suite 510, McLean, Virginia 22102.
6. Contract - Grant No. 1 R43 AA11608-01 dated September 22, 1997 issued
by National Institutes of Health, 6000 Executive Blvd., Rockville, MD
20892-7003 to Essex Corporation, 1040 Woodcock Road, Suite 227,
Orlando, FL 32803.
7. Contract No. USZA92-97-C-0055 dated September 16, 1997 issued by the
HQ, US Army Special Operations Command, Ft. Bragg, NC 28307-5200 to
Essex Corporation, 1430 Springhill Road, Suite 510, McLean, VA 22102.
8. Contract No. N39998-97-M-5542 dated September 10, 1997 issued by Dept.
Of Defense, Office of Special Technology, 10530 Riverview Road,
Building 3, Ft. Washington, MD 20744 to Essex Corporation, 1430
Springhill Road, Suite 510, McLean, VA 22102.
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
9. Contract - Grant No. 1 R43 AG14316-01 dated September 30, 1997 issued
by National Institutes of Health, 6000 Executive Blvd., Rockville, MD
20892-7003 to Essex Corporation, 1040 Woodcock Road, Suite 227,
Orlando, FL 32803.
10. Agreement for Consulting Services, dated June 7, 1993, between Edward
H. Frederick, Jr.,and Essex Corporation.
11. Agreement for Consulting Services, dated March 11, 1997, between
Stephen A. Povah and Essex Corporation.
12. Subcontract No. 2418A, dated December 16, 1996, between the University
of Central Florida and Essex Corporation.
13. Subcontract No. 2420-01, dated March 21, 1997, between James Madison
University and Essex Corporation.
14. Subcontract No. 2418B, dated December 16, 1996, between Jones and Jones
Research Associated and Essex Corporation
15. All leases set forth in SCHEDULE 2.18.
16. All capital leases set forth in SCHEDULE 1.3(3).
17. Items 1 - 5 on SCHEDULE 2.9.
18. All lease maintenance agreements per SCHEDULE 1.3(5).
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.18
LEASES
1. Lease, dated October 1, 1986, between Freida V. Bruer and Essex
Corporation, a Virginia corporation, for one 14' x 70' mobile office
unit.
2. Lease, dated December 8, 1994, between TDP Corporation, a Virginia
corporation, and Essex Corporation, a Virginia corporation, for the
premises identified as Suite 510 of the building located at 1430
Springhill Road, McLean Virginia, commonly known as Tysons Dulles Plaza
II.
3. Lease, dated April 1, 1997, between Koger Equity, Inc., a Florida
corporation, and Essex Corporation, a Virginia corporation, for the
premises identified as Suite 227 of the building located at 1040
Woodcock Road, Orlando Florida, commonly known as Palmetto.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.19
INTELLECTUAL PROPERTIES
1. LIST:
1.1 Delta
1.2 CDL/Passing Gear
1.3 Information from SED SBIR's to extent not restricted by U. S.
Government prior rights. Per following table:
ESSEX SHORT TITLE/DATE/AGENCY PRODUCT COMMENTS
JOB NO.
2418 VE Assess Test Battery Software Project on-going
12/96-12/98 (NASA)
2381 Indexing - Posture Software Technique for converting video
10/94-10/96 (NSF) Data
2366 A Smart System (PAT) Software Technique for converting video
2/94-2/96 (NASA) Data
2365 Performance Readiness Software A series of visual & cognitive
2/94-2/96 (NASA) tests were computerized
2353 Temporal Factors Software - Visual tests were computerized
6/93-6/95 (NSF) Temporal
Factors
Battery
2350 Isoperformance Software Programs written to analyze
8/93-8/95 (Brooks AFB) manpower data
2342 Record/Eval Sim Sick Software Technique for converting video
Device - 4/93-4/95 data
(NAVAIR)
2339 Workload Device Hardware & Eye movement scoring algorithms
4/93-4/95 (NAWC) Software developed
2326 Dose Equivalency Software for DELTA
9/92-9/94 (NSF)
2320 Dark Focus Hardware - Hand held device developed for
9/92-9/94 (NASA) Dark Focus visual test
Device
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
2. EXCEPTIONS:
2.1 Letters from various legal counsel regarding US Patent No. 5,103,408.
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.20
PROPRIETARY INFORMATION OF THIRD PARTIES
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.22
TAXES
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.23
LITIGATION
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 2.24
ENVIRONMENTAL PERMITS
None.
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 5.1
CONSENTS
1. [reserved]
2. Novation of Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued
by the Directorate of Contracting, USAAPGSA, Ryan Building, APG,
Maryland 21005-5001, to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, Virginia 22102.
3. Novation of Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued
by USA CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower Avenue
(AMSEL-AC-WB- B), Alexandria, Virginia 22331-0700, to Essex
Corporation, 1430 Springhill Road, Suite 510, McLean, Virginia 22102.
4. Novation of Subcontract No. 116054-24195, dated February 11, 1997,
issued by Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia
22070, to Essex Corporation, Systems Effectiveness Division, 1430
Springhill Road, Suite 510, McLean, Virginia 22102 including Delivery
Order DAAB07-96-D-H753.
5. Novation of Contract No. NAS9-97022, dated December 2, 1996, issued by
NASA Johnson Space Center, S&LS Acquisition Management, 2101 NASA Road
1, Houston, Texas 77058- 3698, to Essex Corporation, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
6. Novation of Contract No. DE-AC04-93AL91124, dated September 15, 1993,
issued by the Department of Energy, Albuquerque Operations Office
P. O. Box 5400, Albuquerque, New Mexico 87185-5400, to Essex
Corporation, 1430 Springhill Road, Suite 510, McLean, Virginia 22102.
7. Novation of Contract - Grant No. 1 R43 AA11608-01 dated September 22,
1997 issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock Road,
Suite 227, Orlando, FL 32803.
8. Novation of Contract No. USZA92-97-C-0055 dated September 16, 1997
issued by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road, Suite 510,
McLean, VA 22102.
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
9 Novation of Contract No. N39998-97-M-5542 dated September 10, 1997
issued by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation, 1430 Springhill Road, Suite 510, McLean, VA 22102.
10. Novation of Contract - Grant No. 1 R43 AG14316-01 dated September 30,
1997 issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock Road,
Suite 227, Orlando, FL 32803.
11. Assignment of Lease dated December 8, 1994, between TDP Corporation, a
Virginia corporation, and Essex Corporation, a Virginia corporation,
for the premises identified as Suite 510 of the building located at
1430 Springhill Road, McLean Virginia, commonly known as Tysons Dulles
Plaza II.
- 2 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
SCHEDULE 5.3
NOVATED CONTRACTS
1. Contract No. DAAD05-93-D-7022, dated April 1, 1993, issued by the
Directorate of Contracting, USAAPGSA, Ryan Building, APG, Maryland
21005-5001, to Essex Corporation, 1430 Springhill Road, Suite 510,
McLean, Virginia 22102.
2. Contract No. DAAB07-97-C-6013, dated March 14, 1997, issued by USA
CECOM ACQ CTR, Washington OPS Office, 2461 Eisenhower Avenue
(AMSEL-AC-WB-B), Alexandria, Virginia 22331-0700, to Essex Corporation,
1430 Springhill Road, Suite 510, McLean, Virginia 22102.
3. Subcontract No. 116054-24195, dated February 11, 1997, issued by
Fibertek, Inc. ESS, 510 Herndon Parkway, Herndon, Virginia 22070, to
Essex Corporation, Systems Effectiveness Division, 1430 Springhill
Road, Suite 510, McLean, Virginia 22102.
4. Contract No. NAS9-97022, dated December 2, 1996, issued by NASA Johnson
Space Center, S&LS Acquisition Management, 2101 NASA Road 1, Houston,
Texas 77058-3698, to Essex Corporation, 1430 Springhill Road, Suite
510, McLean, Virginia 22102.
5. Contract No. DE-AC04-93AL91124, dated September 15, 1993, issued by the
Department of Energy, Albuquerque Operations Office, P.O. Box 5400,
Albuquerque, New Mexico 87185-5400, to Essex Corporation, 1430
Springhill Road, Suite 510, McLean, Virginia 22102.
6. Novation of Contract - Grant No. 1 R43 AA11608-01 dated September 22,
1997 issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock Road,
Suite 227, Orlando, FL 32803.
7. Novation of Contract - Grant No. 1 R43 AG14316-01 dated September 30,
1997 issued by National Institutes of Health, 6000 Executive Blvd.,
Rockville, MD 20892-7003 to Essex Corporation, 1040 Woodcock Road,
Suite 227, Orlando, FL 32803.
8. Novation of Contract No. USZA92-97-C-0055 dated September 16, 1997
issued by the HQ, US Army Special Operations Command, Ft. Bragg, NC
28307-5200 to Essex Corporation, 1430 Springhill Road Suite 510,
McLean, VA 22102.
- 1 -
<PAGE>
ASSET PURCHASE AGREEMENT
16 OCTOBER 1997
9. Novation of Contract No. N39998-97-M-5542 dated September 10, 1997
issued by Dept. Of Defense, Office of Special Technology, 10530
Riverview Road, Building 3, Ft. Washington, MD 20744 to Essex
Corporation, 1430 Springhill Road, Suite 510, McLean, VA 22102.
- 2 -
<PAGE>
